Document of The World Bank FOR OFFICIAL USE ONLY Report No. 85500-ID INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL FINANCE CORPORATION COUNTRY PARTNERSHIP STRATEGY PROGRESS REPORT FOR THE REPUBLIC OF INDONESIA FOR THE PERIOD OF FY13-15 May 29, 2014 Indonesia Country Management Unit, World Bank East Asia and Pacific Region International Finance Corporation East Asia and Pacific Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The last Country Partnership Strategy (CPS) Report No. 72906-IND was discussed by the Board on December 13, 2012 CURRENCY EQUIVALENTS Currency unit: Rupiah (Rp) as of May 19, 2014 US$1 = Rp. 11,456 FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS AAA Analytic and Advisory Activities FIRM Financial Sector Reform and ADB Asian Development Bank Modernization AfD Agence Francaise de Developpement FY Fiscal Year AGO Attorney General’s Office GDP Gross Domestic Product AusAID Australian Aid Agency GEF Global Environment Facility BAPPENAS State Ministry of Development GFDRR Global Facility for Disaster Planning Reduction and Recovery BERMUTU Better Education through Reformed GFMRAP Government Financial Management Management and Universal Teacher and Revenue Administration Project Upgrading Project GoI Government of Indonesia BKPM Investment Coordinating Board GPOBA Global Partnership on Output-based BNPB National Disaster Management Aid Agency GPSA Global Partnership for Social BOS Government’s School Operational Accountability Assistance HIV/AIDS Human immunodeficiency virus BPK Supreme Audit Institution infection /acquired CCT Conditional Cash Transfer immunodeficiency syndrome CDD Community Driven Development IBBS Integrated Bio-Behavioral Survey CIDA Canadian International Development IBRD International Bank for Agency Reconstruction and Development COREMAP Coral Reef Rehabilitation and ICT Information and Communication Management Project Technology IFC International Finance Corporation CPS Country Partnership Strategy IIFF Indonesia Infrastructure Finance DAK Special Allocation Fund Facility DPL Development Policy Loan IMDFF-DR Multi Donor Funding Facility for DPL-DDO Deferred Drawdown Option Disaster Recovery DRM Disaster Risk Management INSTANSI Institutional, Tax Administration, ECED Early Childhood Education and Social and Investment DPL Development JBIC Japan Bank for International EITI Extractive Industries Transparency Cooperation Initiative JSDF Japan Social Development Fund ESW Economic and Sector Work JICA Japan International Cooperation FCPF Forest Carbon Partnership Facility Agency FDI Foreign Direct Investment JUFMP Jakarta Urgent Flood Mitigation FIP Forest Investment Program Project KPK Anti-Corruption Commission i KUR Kredit Usaha Rakyat PSF PNPM Program Support Facility M&E Monitoring & Evaluation PT Perseroan Terbatas (Limited MCC Millennium Challenge Corporation Company) MDFTIC Multi Donor Facility for Trade and R&D Research and Development Investment Climate REDD+ Reducing Emissions from MDG Millennium Development Goals Deforestation and Forest Degradation MIGA Multilateral Investment Guarantee RISET Research and Innovation in Science Agency &Technology Project MoF Ministry of Finance RPJMN Medium-Term Development Plan MP3EI Master Plan for “Acceleration and SBY President S.B. Yudhoyono Expansion of Indonesia’s Economic SECO Swiss State Secretariat for Economic Development 2011-2025” Affairs MSME Micro, Small, and Medium SJSN National Social Security System Law Enterprises SMART-D Sustainable Management of NGO Non-Governmental Organization Agricultural Research and OECD Organization for Economic Technology Dissemination Project Cooperation and Development SME Small- Medium Sized Enterprise OGP Open Government Partnership SOE State-owned enterprises OJK Otoritas Jasa Keuangan (Indonesia SPAN Automated budget and treasury Financial Services Authority) system PAMSIMAS Rural Water and Sanitation Program STATCAP- Statistical Capacity Building PEACH Public Expenditure Analysis and CERDAS – Change and Reform for the Capacity Harmonization Development of Statistics PER Public Expenditure Review TA Technical Assistance PERISAI Program for Economic Resilience, TF Trust Fund Investment and Social Assistance in UHC Universal Health Coverage Indonesia UNCAC United Nations Convention Against PFM Public Financial Management Corruption PINTAR Project for Indonesian Tax USAID United States Aid Agency Administration VGF Viability Gap Funding PIS Program for International Student WBG World Bank Group Assessment WINRIP Western Indonesia National Roads PNPM National Program for Community Improvement Project Empowerment PPP Public-Private Partnership IDA/IBRD IFC MIGA Vice President: Axel van Trotsenburg Karin Finkelston Michel Wormser Country Director: Rodrigo A. Chaves Sérgio Pimenta Muhamet Fall Country Mark V. Hagerstorm Sarvesh Suri/Catherine Sarah Martin Paul Barbour Manager/TTL: ii Table of Contents I.  INTRODUCTION ................................................................................................................... 1  II.  COUNTRY CONTEXT....................................................................................................... 1  Development Achievements and Challenges........................................................................... 1  Recent Economic Developments .............................................................................................. 2  Poverty and Shared Prosperity ................................................................................................ 3  III.  THE PARTNERSHIP .......................................................................................................... 4  Government’s Development Agenda ....................................................................................... 4  The World Bank Group Program ........................................................................................... 5  IV.  PROGRESS IN IMPLEMENTION ..................................................................................... 6  PRO-GROWTH – Promoting Prosperity ............................................................................... 6  Macro and Fiscal ....................................................................................................................... 7  Financial Sector ......................................................................................................................... 8  Competitiveness ......................................................................................................................... 9  Connectivity ............................................................................................................................... 9  Infrastructure .......................................................................................................................... 10  PRO-JOBS - Enhancing Skills and Technology, and Improving Social Protection ......... 10  Education ................................................................................................................................. 11  Social Insurance....................................................................................................................... 12  PRO-POOR – Promoting Communities, Protecting the Vulnerable and Improving Their Health Outcomes ..................................................................................................................... 12  Poverty Targeting .................................................................................................................... 12  Community Development ....................................................................................................... 13  Health ....................................................................................................................................... 14  PRO-GREEN – Ensuring Sustainable Development and Improving Disaster Resilience 14  Climate Change and Environmental Sustainability ............................................................ 15  Disaster Risk Management ..................................................................................................... 16  CROSS-CUTTING - Gender and Governance .................................................................... 16  Gender ...................................................................................................................................... 16  Governance and Anti-Corruption ......................................................................................... 16  V.  PROGRAM AND PORTFOLIO PERFORMANCE......................................................... 17  Financing and Knowledge ...................................................................................................... 17  Collaboration with Development Partners ........................................................................... 18  iv Portfolio Management ............................................................................................................ 18  VI.  MOVING FORWARD ...................................................................................................... 18  Implementation........................................................................................................................ 18  Managing Risks ....................................................................................................................... 19  Preparing for the Next Country Partnership Strategy ........................................................ 20  VII.  APPENDICES AND ANNEXES ...................................................................................... 21  Annex 1: Indonesia CPS FY13-15 Results Matrix ............................................................... 21  Annex A1: Key Economic & Program Indicators................................................................ 39  Annex A2: Indonesia at a Glance........................................................................................... 40  Annex B2: Portfolio Performance and Management........................................................... 43  Annex B3: Indicative IBRD Lending Program .................................................................... 44  Annex B4: Analytical and Advisory Activities ..................................................................... 45  Annex B6: Key Economic Indicators .................................................................................... 50  Annex B7: Key Exposure Indicators ..................................................................................... 52  Annex B8.1: Operations Portfolio (IBRD/IDA and Grants) ............................................... 53  Annex B8.2: Committed and Disbursed Outstanding Investment Portfolio (IFC)........... 54  Map of Indonesia (IBRD 33420R3) ....................................................................................... 55  v I. INTRODUCTION 1. This document reports on progress under the World Bank Group Country Partnership Strategy (CPS) FY13-15 discussed by the Board on December 13, 2012. The CPS is aligned with the country’s Medium Term Development Plan, which seeks to accelerate development through a Pro-Growth, Pro-Jobs, Pro-Poor and Pro-Green agenda, and is also consistent with the WBG goals announced in the interim period. 2. The WBG program has proceeded largely as anticipated and the CPS remains highly relevant to the country’s development challenges and promoting poverty reduction and shared prosperity. Support remains on track based on deliveries and indicative milestones. While there are delays in implementing some operations, these are being addressed. Prospects are strong for contributing significantly to development results across the four themes of the Government’s program. 2. The CPS covers the last three years of the current administration headed by President Susilo Bambang Yudhoyono’s (SBY). A Systematic Country Diagnosis (SCD) will be initiated once the new administration takes office in late 2014 and a new Country Partnership Framework (CFP) will be prepared for FY16. In the meantime, management will inform the Board if there are any substantive changes in the country context that might impact on the program. II. COUNTRY CONTEXT Development Achievements and Challenges 3. Since 2005, Indonesia has emerged as a vibrant and stable democracy and as a self- assured middle-income economy with growing regional and global influence. The past decade saw robust economic growth as Indonesia benefited from a boom in commodity exports, increasing investor confidence and substantial capital inflows, as well as a strong demographic dividend. Output growth averaged 5.5 percent per year from 2002 to 2012, on the back of strong domestic consumption and generally robust export growth. Strong economic growth supported gains in poverty reduction and contributed to a growing middle class. Prudent economic management resulted in low budget deficits, a much reduced public debt-to-GDP ratio, and manageable inflation. At the same time, important development challenges remain. Financial markets are still vulnerable to changes in international investor sentiment, as witnessed by the macro turbulence experienced during the second semester of 2013. 4. Indonesia still has a large poor population with 30 million (12 percent) below the national poverty line (PPP$1.25 a day) and the pace of poverty reduction is slowing. An additional 65 million people above the poverty line are highly vulnerable, and inequality is growing. The potential of the private sector to generate jobs is not yet fully realized, due to continued regulatory constraints, limited access to finance, particularly among small and medium size enterprises, and large infrastructure gaps. Education is not supplying the mix of skills needed to meet market needs. Despite recent adjustments, fuel subsidies continue to absorb budget that might otherwise be available for infrastructure and social spending. Public spending on health is significantly below comparators and the poor are particularly vulnerable to health shocks. Deforestation and flooding highlight the need for investing in climate change adaptation and mitigation and managing natural resources in a sustainable manner. While there has been tangible progress in gender equality, disparities exist in some areas. Maternal mortality rates remain high and women’s voice in the public domain remains relatively weak. Women earn only 70 percent of what men earn, are more likely to work in the informal sector and are the majority of unskilled migrant laborers. Further progress is needed to strengthen governance, while increasingly Indonesians are demanding stronger accountability in institutions and better governance in businesses. Recent Economic Developments 5. Indonesia's economy is slowing reflecting lower commodity prices and tighter external financing. GDP has decelerated, from 6.5 percent in 2011, to 6.2 percent in 2012, and 5.8 percent for 2013. During 2012, the major drag on growth was net exports, followed in 2013 by weaker fixed investment growth. 6. The need to address the emergence of current account deficits since 2011 has dominated macroeconomic management. Indonesia in 2012 recorded its first annual current account deficit since 1997, of 2.7 percent of GDP, followed by a 3.3 percent deficit in 2013. The deficit was triggered by falling international prices for some of Indonesia's key commodity exports and high import growth linked to strong domestic demand. The current account deficit is projected to narrow, reflecting a gradual recovery in export revenues and import compression, which has been particularly pronounced for capital goods imports, in line with subdued investment growth. 7. Indonesian financial markets were significantly affected by the global pullback in emerging market assets beginning in May 2013, which triggered portfolio investment outflows from Indonesia and tightened external borrowing conditions. Gross international reserves fell from US$ 122.7 billion in June 2011 to a low of US$ 92.7 billion in July 2013. Subsequently, the Rupiah was allowed to depreciate sharply from August-December 2013, to be down 26 percent against the USD in 2013. Monetary policy tightened, and with a pick-up in capital inflows, reserves have risen steadily since July 2013, to USD 105.6 billion in April, and the Rupiah has regained some ground, appreciating by over 5 percent against the USD year-to-date. 8. The overall fiscal policy stance has remained prudent but is facing pressure from subsidy costs and weaker revenue growth. The large 33 percent average increase in fuel prices in June 2013 was a step forward, but fuel subsidy costs remain sensitive to Rupiah-denominated fuel prices and remain a drag on the fiscal sector (with budgeted spending for 2014 of approximately 2 percent of GDP). 9. GDP growth in 2014 is projected to be 5.3 percent, down from 5.8 percent in 2013, and holding at similar levels for 2015 before picking up again to 5.6 percent in 2016, in the base case. These levels are about a full percentage point lower than previously projected. Private consumption, the mainstay of the economy, faces continued pressures from tighter credit and less favorable wealth effects. In the face of tighter credit, reduced commodity-related profits, and increased imported input costs, overall fixed investment growth is likely to be subdued. The investment outlook is also clouded by the ongoing regulatory constraints and uncertainties in some areas, notably mining. Less favorable terms of trade and tighter financing conditions, 2 coupled with ongoing supply-side constraints, suggest it will be difficult to return to the 6 percent and above growth rates to which Indonesia has become accustomed since 2007. In the event of further negative external shocks, Indonesia will feel the effects, but will be in a relatively strong position to respond. Foreign currency reserves are well below their peak but remain sizable. The government balance sheet remains strong, with debt at under 26 percent of GDP. 10. While economic growth is moderating, in the base case this is projected to stabilize at a pace which is still solid but more commensurate with a sustainable current account deficit in the context of tighter global liquidity conditions. Downside risks to the outlook are significant, with a particular risk that external funding constraints tighten further and place further strain on the Rupiah or official reserves, for example due to a further weakening in key export commodity prices, or deterioration in offshore appetite for Indonesian financial assets, requiring additional monetary policy tightening, denting confidence and further reducing growth. The risks of such a scenario resulting in a loss of macroeconomic stability are mitigated by a policy framework that is proving generally responsive to near-term macroeconomic imbalances, and policy buffers, although reduced, remain ample. 11. Indonesia's medium-term economic prospects are supported by powerful structural factors, such as its large young, and increasingly urban and middle class, population, and rich natural resources endowment, although increasingly depleted and degraded. However, policymakers are faced with challenges, including (i) significant excess demand and serious capacity gaps and congestion problems reflecting insufficient infrastructure and supply-side bottlenecks in many segments of the economy; and, (ii) the strong impact of the excess demand on the trade balance creating a trade-off between growth and external balances as evidenced since the sharp decline of commodity prices in mid-2011. The first challenge is driven by policy developments over the past decade, in particular delays in the implementation of structural reforms in the area of infrastructure. The second one is related to changing conditions in global commodity and financial markets, which have supported Indonesia’s and emerging markets’ growth for most of the past decade. Poverty and Shared Prosperity 12. The social outcomes associated with Indonesia’s economic transformation have been mixed, with a significant decline in poverty sitting alongside a stubbornly high degree of vulnerability. On the one hand, growth helped reduce poverty through significant job creation. Twenty million new jobs were created between 2001 and 2011, 18 million of which were in urban areas, helping Indonesia to halve poverty from 24 percent in 1999 to 12 percent in 2012. At the same time, about 65 million people hover just above the poverty line and remain highly susceptible to shocks (vulnerability being defined as living on less than 50 percent more than the poverty line). These households, along with the poor, are highly vulnerable to food price increases, health shocks and natural disasters. This high level of vulnerability reflects the quality of the jobs created. Most of the new jobs were created in low productivity (and informal) sectors where real earnings growth is sluggish. The labor released by the rural economy predominantly joined the low-end of the services sector, partly because the more formal manufacturing sector grew sluggishly, and partly because the higher end of the services sector (e.g. finance and telecom) requires higher levels of education and skills. 3 13. Another reason for persistent vulnerability, despite sustained economic growth, is that the poorest households experienced a small increase in real incomes, compared with richer ones. Between 2003 and 2010, real growth of per capita consumption was 1.3 percent per annum for the poorest 40 percent of households, compared with 3.5 percent for the next 40 percent, and 5.9 percent for the top 20 percent. Moreover, an increasing amount of consumption inequality in Indonesia is explained by differences amongst people in access to opportunities. In 2002, 27 percent of child consumption inequality was due to differences in their gender, the gender and employment status of the head of their household, their parents’ education, and their region and location of birth. By 2012, this had reached 37 percent. 14. The goals of furthering prosperity and reducing poverty and vulnerability would require sustained, fast economic growth and higher labor productivity. Between 2013 and 2020, the population of working age will increase by 15 million from the current 174 million and absorbing them will require fast economic growth. But to reduce vulnerability, it would need to be supported by labor productivity growth. A policy framework for achieving this is detailed in the recent Development Policy Review (DPR),1 which highlights the need to close Indonesia’s infrastructure gap, enhance skills in the labor force, and capture agglomeration economies in cities. These policies would not only relax constraint on growth but would help unleash the productivity potential of the economy. Sharing prosperity more widely would also call for access to essential services for all, strengthening social protection, and managing natural disaster risks and building resilience. Political Developments 15. The presidential elections are scheduled for July 9, 2014, and the change in administration would occur in late October. As SBY was reelected to an additional five-year term in 2009, this would mark the first presidential succession since 2004. III. THE PARTNERSHIP Government’s Development Agenda 16. The National Long Term Development Plan (RPJP 2005-2025) and associated five-year medium term plans provide the framework for reinforcing economic stability and initiating structural reforms. In 2011, GoI launched the Master Plan for “Acceleration and Expansion of Indonesia’s Economic Development 2011-2025” (MP3EI) for: (i) fostering centers of growth in each major island group by developing leading resource-based industrial clusters; (ii) building synergies between those centers of growth, including international connectivity; and (iii), complementing connectivity by improving human resources capabilities and innovation. The Government's agenda is based on its four strategic objectives of pro-growth, pro-jobs, pro-poor and pro-green development, which includes programs in, inter alia, education, health, poverty reduction, job creation, infrastructure, food security, energy, good governance, anti-corruption enforcement, inclusive and equitable development, climate and disaster resilience, environmental 1  World Bank (2014) Indonesia:  Avoiding the Trap.  4 protection, and natural resource management in support of sustainable and inclusive growth for the longer term. The World Bank Group Program 17. The Bank Group Partnership is aligned with the Government’s development priorities in their pro-growth, pro-jobs, pro-poor and pro-green focus. Figure 1 indicates the key engagement areas where WBG support is expected to contribute to development results. Cross-cutting themes include gender equity, as well as governance and anti-corruption. Engagements include a wide range of instruments and financing sources. The Indonesia “business model” is based heavily on being a strategic and administrative platform for the delivery of third party financing, including multi-donor and bilateral donor trust funds and project financing. Figure 1: WBG Support For Pro-Growth, Pro-Jobs, Pro-Poor, And Pro-Green 18. While the CPS predates the development of the WBG’s twin goals of reducing poverty and enhancing shared prosperity, both the country’s own development program and the engagement areas agreed for WBG support resonate strongly with these goals. Engagements under Pro-Growth seek to broaden growth to include the bottom 40 percent through connectivity 5 with lagging regions and external markets, competitiveness and financial market development seek to promote business development and access to finance for women and micro, small and medium sized enterprises. Support for central and subnational governments seeks to enhance the quality of public spending and redirect away from regressive fuel subsidies and toward infrastructure, social protection, including strengthening the safety net for mitigating shocks to the poor and vulnerable, and public service delivery benefiting the lower 40 percent. Pro-Jobs engagements seek to enhance labor productivity and broaden social insurance to enhance shared prosperity and to avoid the middle-income trap. Pro-Poor engagements enhance targeting of the poor with social assistance, support community development programs that have been proven to reduce poverty and promote the welfare of the vulnerable, rural development engagements target small farmers, including women, health interventions seek to promote universal health coverage to the poor, who are particularly vulnerable to health shocks, and target poor communities and women with health and water and sanitation services. Pro-Green engagements seek to promote sustainable green growth, climate change adaption and mitigation, and disaster risk management whose negative consequences disproportionally impact the poor. IV. PROGRESS IN IMPLEMENTION 19. The CPS remains highly relevant to the country’s development challenges and the objectives of promoting poverty reduction and shared prosperity. This is despite the turbulence in financial markets experienced among emerging markets in anticipation of stimulus tapering in the US. Indeed, WBG support already in place helped facilitate Indonesia’s response. While the WBG program remains on track based on deliveries and indicative milestones, there were delays in implementing several large infrastructure and institution building operations. Measure are being undertaken to accelerate implementation. Prospects remain strong for the WBG to significantly contribute to the Government’s achieving development results across all four themes of its program. PRO-GROWTH – Promoting Prosperity 20. Sustained economic growth in Indonesia is crucial for reducing poverty and sharing prosperity. As the population entering working age is increasing significantly, healthy levels of growth are required just to keep pace in absorbing new entrants into the labor market. At the same time, the equity of growth can be improved through policies and investments that facilitate economic flows across this vast archipelagic country and enhance financial inclusion and the business environment for small and medium size firms. At the same time, the ability to weather and bounce back quickly from external shocks is critical for protecting hard won social and economic gains. The WBG supports development results to promote macro stability and crisis management, improve the quality of public spending and financial management, maintain financial sector stability while enhancing access, improve the regulatory environment for competition and innovation, support private sector companies in increasing competitiveness, improve connectivity and logistics performance, and increase the quantity and efficiency of investment in infrastructure while leveraging private sector participation. 6 Macro and Fiscal 21. In support of macro stability and crisis management, the IBRD has provided knowledge services to support crisis preparedness and led in late FY11 a package of contingency fiscal financing of approximately US$5 billion that includes Program for Economic Resilience, Investment and Social Assistance (PERISAI) DPL-DDO for US$2 billion and around US$3 billion from the Government of Japan (JPY120 billion), Australian Treasury (AUD$1 billion) and the Asian Development Bank (US$500 million). Monitoring and coordination mechanisms facilitate a flexible response, including crisis-related provisions in the budget that allow revision for expenditures and financing sources under a streamlined parliamentary approval process. The Government is expected to request extension of the PERISAI DPL-DDO for another year. 22. IBRD engagement on the quality of spending and institutional capacity includes development policy lending and knowledge services. There was a significant breakthrough on the fiscal side, with dialogue and knowledge services supporting politically difficult and long delayed measures to reduce fuel subsidies. This is expected to help improve the quality of spending by switching resources to needed investment in infrastructure and social protection, among other areas. Still, shortfalls in executing the capital budget highlight continuing challenges in implementing public infrastructure, which is plagued by poor coordination, slow procurement processes, and delays in regulating new land acquisition legislation. IBRD financed projects, while benefiting from supervision and support for preparation and implementation support, have been similarly affected by these weaknesses (see para 31). 23. Ongoing IBRD support, including through the series of Institutional, Tax Administration, Social and Investment DPL (INSTANSI), is also strengthening financial management and budget processes in collaboration with the EC, the Netherlands and Switzerland. GoI now has medium- term budget forecasting tools and M&E processes have been developed to inform future budget allocations and regulations for accrual based accounting policies and chart of accounts have been issued. The roll out of the integrated budget and treasury information management system (SPAN) has begun. Finally, the Government Debt and Risk Management (DGRM) advisory program, with Swiss financing (SECO), is supporting risk modeling, contingent liabilities and asset liability management. The open government/data portal has been established and regulation on e-government/e-services is being adopted. Additional financing for the Local Government and Decentralization Project (DAK) is expected to continue supporting improved PFM and public spending at the provincial and district level. 24. At the same time, operational support for improved tax administration (Project for Indonesia Tax Administration Reform - PINTAR) and data sharing and coordination (Statistical Capacity Building Change and Reform for the Development of Statistics Project - STATCAP- CERDAS) has been plagued by poor implementation. For tax administration, a new phased, modular approach is now being undertaken as more operationally feasible. The Bank is also providing technical assistance to the Ministry of Finance on revenue administration in the natural resource sectors, starting with mining royalties. In the meantime, the restructuring of STATCAP has just been completed, and activities are expected to restart soon. 7 Financial Sector 25. The WBG is delivering a variety of lending and knowledge services to support financial sector stability and crisis preparedness, diversification, financial inclusion and support for economic development in collaboration with Australia, Canada, Finland, the Netherlands, Switzerland, and the USA. Box 1 describes the joint IBRD/IFC program to help transform the financial sector. Development milestones are being met and reflect a stable banking sector that has continued to increase lending in a sound manner, with credit growth of 21 percent in 2013. Non-bank financial institutions are keeping pace and represent around 20 percent of financial assets. Box 1: The World Bank-IFC Joint Approach  Drawing upon the full range of WBG products for the financial sector.  For the World Bank, this has included extensive use of AAA products such as sector diagnostics, policy notes, policy advice, and discreet technical assistance), investment lending and development policy lending in support of the GOI’s medium-term reform agenda.  For IFC, this includes Investment Services targeted in FY14 close to US$275 million for expanding access to finance for micro and agri-finance, micro, small and medium enterprises & sustainable finance. IFC Advisory Services target building capacity of private FI clients and supporting regulatory reforms in agri- finance, housing finance, gender finance, sustainable energy finance, the financial infrastructure (credit reporting and secured transactions registries), retail banking and e-payments, environmental and social risk management, and development of capital markets.  Strengthening synergies.  With a focus on active collaboration, as well as coordination, the IBRD is taking the lead on legislative and regulatory reforms and institutional development, while the IFC is focusing on building private sector capacity. The financial sector policy dialogue is led respectively by IBRD with the relevant regulators and GoI while IFC facilitates feedback from private sector stakeholders on the policy making process.  In selected areas, IBRD and IFC join their resources to provide advice and support under single engagements with financial regulators. The most recent example is the advisory services engagement by IFC with the Bank Indonesia where both IFC and IBRD experts were deployed in 2012 to produce a joint report with findings and recommendations related to “branchless banking”/ agent banking reforms. These recommendations were taken into account by the BI in its guiding principles for the 5 bank pilots in “branchless banking”/ agent banking in 2013. In 2014, IBRD and IFC are continuing joining their resources in supporting the BI and OJK to issue the respective regulations.  Expected Impact  Efforts are expected to have a transformational influence on the financial sector and support the GoI in building a sound, stable and inclusive financial sector. The expected long term impact will be: (i) Increased resilience and stability of the financial sector; and, (ii) A deeper financial sector supporting an inclusive and sustainable growth. (Specific targets for the CPS period are found in the Results Matrix). 26. Indonesia’s new Financial Services Authority (OJK) has become fully operational and the Financial System Stability Coordination Forum (FKSSK) is functioning. With IBRD and Toronto Centre support the FKSSK recently conducted a financial crisis simulation, which 8 identified gaps in the GOI crisis management framework that need to be addressed. The PERISAI DPL-DDO and the Financial Sector Reform and Modernization DPL (FIRM) have supported this process. IFC assisted OJK in launching a Corporate Governance Road Map, which details a series of planned regulatory changes expected to enhance corporate governance performance in capital markets. To promote greater access, IFC has committed almost US$113.9 million to three financial institutions targeting SME and micro-finance and expects further commitments by end FY14. IFC is also supporting pilots for a new financial instrument to provide micro-lending to small farmers, and partnering with a leading cement sector company and a micro-finance institution to extend micro-housing loans. 27. The WBG also assisted Bank Indonesia in facilitating a market study relating to proposed branchless banking regulations The WBG is also supporting a greater role for the financial sector in economic development through the joint IBRD-IFC financed Indonesia Infrastructure Finance Facility (IIFF), which is providing long term financing. In 2013, IIFF leveraged IDR2.5 trillion in commitments to a number of projects in the transportation, energy and telecommunications. Competitiveness 28. The WBG engagement focuses on contributing to improve competiveness through better trade logistics and ease in Doing Business, in collaboration with Australia, Canada, Finland, the Netherlands, New Zealand, Switzerland and the USA. IBRD support has gone beyond that expected for the Investors Relation Unit to include investment facilitation more broadly, some of which are already showing positive impact. These are now part of a broader set of reforms included in a policy package announced in October 2013. This accelerated effort to improve the business environment, especially related to small- and medium enterprises, consists of 17 actions across eight “Doing Business” areas. IFC is supporting the Jakarta Provincial Government in streamlining business start-up procedures and cutting the time from 29 days down to 3 days. 29. However, despite the reform measures outlined above, significant concern remains with regard to the investment climate. A series of measures that have increased regulatory uncertainty. The government has finally issued the long-awaited Negative Investment List (DNI) revision. The new regulation includes provisions to further open a few sectors to foreign investment (increases in foreign ownership limits) and to facilitate PPPs in some sectors (e.g. energy). At the same time, additional restrictions to foreign investment were added in many sectors, including energy and mineral resources, trade/distribution and horticulture. In addition, a number of legislative and regulatory changes have added to uncertainty and could worsen the investment climate overall, depending upon how they are regulated and implemented. A new industry law provides the Ministry of Industry with authority to potentially intervene in the market and even in individual firms’ decisions. Legislation in the mining sector designed to enhance local value-added has similarly resulted in uncertainty among investors. Connectivity 30. The connectivity agenda has moved forward with WBG support through development policy lending (Connectivity DPLs) and knowledge services. A National Logistics Blueprint is guiding the agencies; logistics indicators for monitoring progress in policy reform have been 9 drafted; and an action plan identifies 15 quick wins. Private sector participation in logistics and telecom is advancing. The GoI has issued a National Port Masterplan, new ports in Makassar and Surabaya are being tendered to private investors, and a scheduling system would improve freight shipment. IFC has financed procurement of vessels to service oil and gas sector in frontier regions. Regulations governing railways are being enhanced to attract the private sector and use of existing infrastructure. Likewise, performance-based contracting is being promoted for the road sector. ICT has benefited from knowledge services for improved management of radio spectrum to support mobile broadband rollout in underserved areas; introduction of unified/open licensing regime; open access to passive infrastructure to support more competitive fixed broadband market. IFC provided US$50 million loan funding for a telecom tower operator to assist in establishing telecom towers and connectivity across the country, including in frontier regions. A broadband project in Eastern Indonesia is underway and tenders for ICT Fund (PPP) support the roll out of networks in remaining unserved areas. Infrastructure 31. Operational deliveries for the IBRD in the CPS period have included Power Transmission II and Infrastructure Guarantee Fund (IIGF) and knowledge services in collaboration with Australia, France, Germany and Japan. The IIGF supports the establishment of an institutional framework to support PPPs in infrastructure and complementary IFC advisory services provide support for structuring PPP projects in water and power sector projects. Supported by knowledge services, a viability Gap funding mechanism is operational, with the bulk water Bandar Lampung Water PPP under consideration. Other potential operations include light rail and additional water supply. Moreover, During FY13-14 IFC invested close to US$400 million (including mobilization) in infrastructure projects including in wind and hydro power, water, logistics and telecommunication towers sectors. 32. As noted, however, several ongoing Bank-financed infrastructure projects have suffered from implementation delays that plague public investment in general, including in energy (Upper Cisokan Pumped Storage and Geothermal Development), irrigation (Dam Operational Improvement - DIOSP and Water Resources and Irrigation Management - WISMP II), roads (Western Indonesian Road Improvement Project - WINRIP) and flood control (Jakarta Urgent Flood Mitigation Project). With Bank support GoI is making serious efforts to address implementation issues and most of these are now expected to advance and contribute to achieving development results. However, in the case of roads, with the implementation delays of WINRIP and the decision to not advance with an additional roads operations at this time, the indicator for expected outcomes has been reduced in the Results Matrix to a more feasible level. PRO-JOBS - Enhancing Skills and Technology, and Improving Social Protection 33. This pillar of the Government’s strategy complements that for Pro- Growth by focusing on human capital development to reduce a large skills gap and escape the middle income trap. While sustained growth can work to absorb more workers into the market and investment can enhance the equity of growth, improving human development is fundamental for increasing labor productivity and shared prosperity. The share of the population of “productive” age relative to older people is large in Indonesia, and will remain so for the next 15 years. This demographic dividend presents a window of opportunity. The focus of WBG engagement is to support 10 strengthening the overall governance and management of the education system, improve the education quality and performance of teachers, enhance human resource capacity in R&D, and facilitate the institutional transformation required to implementation reform of social insurance. With a more direct role in job creation, IFC, apart from its support for access to finance is also working to support manufacturing companies that generate good quality jobs directly, as well as help to develop SMEs through supply chain linkages. Education 34. The Government has made education a priority, and since 2009 has allocated 20 percent of the national budget to the sector. While increases in investment have led to significant improvements in education access and equity, the quality of basic education has remained persistently low. In the latest OECD PISA international learning assessments, three-quarters of Indonesian 15 year olds were rated at or below the lowest benchmark – a level associated with only rudimentary levels of proficiency and a lack of higher order thinking skills. A further challenge for the education sector is the growing demand for skilled labor and the government has responded by making commitments to universalize senior secondary education. 35. To address the challenge of improving education quality and expanding access to secondary education will require a more effective use of existing resources and improvement in teacher competency. Student teacher ratios are very low in Indonesia compared with other middle income countries. Recent analytical work shows that raising basic education student- teacher ratios to the average for lower middle income countries could save as much as 16% of the total education budget and if managed well have a limited impact on quality. The savings realized could be reallocated to quality improving investments such as improving school readiness through expanded access to ECED. Savings could also be used to finance the significant expansion required in post-basic education. As a result of the teacher certification program, proxies of teacher quality are moving in the right direction. As of 2012, 55 percent of teachers in primary and 86 percent of junior secondary schools held at least an S1 (college) degree with targets of 82 percent and 98 percent, respectively, by 2015. 36. The IBRD is a key partner in the sector, collaborating with Australia, the Netherlands and the USA, with a strong record in operational and knowledge services over the past decade focused on enhancing the quality of education through improvements in finance, governance and teacher quality across different levels of government. The program is currently providing assistance to the government’s development of the next mid-term development plan. 37. The IBRD has also provided assistance in strengthening ECED services particularly through the expansion of good quality provision in poor areas of Indonesia. A program in Early Childhood Education and Development targeted at poor villages, which has establish 6,000 centers in support of targets for increasing gross enrollment rates from 33 percent (2010) to 72 percent. In 2013, the gross enrolment rate had reached 37 percent. The project closed at the end of 2014 and efforts are underway to ensure sustainability of project centers and integrate the ECED centers developed under the project into GoI efforts to expand ECED services. 11 Research and Innovation 38. Under the CPS, two operations were launched to support research and innovation efforts and enhance technology development and uptake. The Research and Innovation in Science and Technology Project (RISET) seeks to reduce fragmentation among public research, increase competitive funding for research, and enhance human resource capacity. While there were some initial delays in project start-up, it started in October 2012 and is on track to meet its objectives. The Sustainable Management of Agriculture Research and Dissemination Project (SMARTD) targets smallholders, including women producers. SMARTD is on track to reach its milestone to enhance staff capacity. Social Insurance 39. Partnering with ADB, Australia, Germany and the ILO, the IBRD is providing an array of knowledge services as GoI moves quickly to establish and implement major reforms in social insurance. Extensive inputs have been provided for the Roadmap for Implementation of the SJSN Employment Programs, which was launched by the government in April, 2014. The Bank is also in the process of preparing strategy and background papers on various aspects of the design, financing and administration of the pension and old age savings programs, including governance, membership expansion, including coverage of informal workers, and contribution collection. Computer modeling is underway for testing alternative benefit levels, contribution requirements and fiscal sustainability. The Bank has also trained government counterparts in modeling and is exploring the creation of an actuarial unit. The Bank works with multiple government counterparts on a daily basis to influence policy and build capacity. PRO-POOR – Promoting Communities, Protecting the Vulnerable and Improving Their Health Outcomes 40. This pillar of the Government strategy targets the poor and vulnerable with interventions to improve their social welfare, livelihoods and access to finance and services. Policy reform efforts are aimed at improving the effectiveness of poverty reduction programs and addressing the problems associated with high levels of vulnerability by improving and extending safety nets. The WBG is supporting development results that would enhance the design and performance of household-targeted and community development programs, promote revitalization of the agriculture, improve health and nutrition outcomes, particularly of the poor, by supporting improved access to quality health care, including maternal and child health services, and enhanced HIV/AIDS surveillance, as well as increased access to safe water and sanitation. Poverty Targeting 41. For poverty targeting, implementation is on track with IBRD support through development policy lending (INSTANSI) and knowledge services in collaboration with Australia and the Netherlands. During the last two years, the program helped the government adopt and implement reforms proposed in the flagship report, Targeting Poor and Vulnerable Households in Indonesia (2012). A unified database of more than 24 million poor and vulnerable households, which was created with IBRD support, has been used to select beneficiaries for the largest national social assistance programs: health fee waivers (Jamkesmas), financial assistance 12 for poor students (BSM), the expansion of the conditional cash transfer programs (PKH), and subsidized rice distribution (Raskin), as well as a number of local government programs. 42. The IBRD also supported the Government of Indonesia in implementing reforms that were identified in the social assistance program review and public expenditure review, Protecting Poor and Vulnerable Households in Indonesia (2012). A number of these reforms were ushered in and formalized through the 2013 fuel subsidy compensation programs, which re-allocated the equivalent of US$2.8 billion from regressive fuel subsidies to temporary and long-term social assistance programs. Coverage of the Scholarships for the Poor program doubled from 8.7 million to 16.6 million beneficiaries and benefit levels increased significantly increase (a 25 percent increase for primary school benefit levels and a 36 percent increase in junior secondary benefit levels). Coverage of the conditional cash transfer program (PKH) is planned to expand from 1.5 million households in 2012 to 2.4 million in 2013 and 3.2 million households by 2014. Average program benefit levels were increased by 60 percent. The reforms, which include the disbursement of 15.5 million social protection cards to households extracted from the UBD, are a major step towards the establishment of an integrated social assistance system in Indonesia. Assistance is also being provided to government partners to mitigate household vulnerability by developing a permanent shock monitoring system. Work on the monitoring component of the system is underway, but the development of shock response protocols is behind schedule. Community Development 43. The IBRD delivered two major operations in support of community level efforts to alleviate poverty and share prosperity, National Community Empowerment Program for Rural Areas (PNPM Rural), and National Community Empowerment for Urban Areas (PNPM Urban), and is collaborating with ADB, Australia, Canada, Denmark, the EC, the Islamic Development Bank, Japan, the Netherlands, the UK and the USA. PNPM Rural is helping to finance community driven development projects in around 70,000 villages throughout the country. The PNPM program demonstrates that community empowerment though investment in the institutions, assets, and capabilities of the poor can support inclusive poverty reduction. Evaluations confirm that PNPM Rural raises incomes, reduces poverty rates, and increases access to services, especially in poorer households and communities. Evidence also shows that PNPM is helping to address the deficit in tertiary infrastructure with lower costs and high technical standards. IFC’s investment in micro-finance is supportive and is expected to reach one million low-income women entrepreneurs by 2017. The PNPM approach has provided lessons for the new Village Law, which will significantly increase fiscal transfers to the village level and provides for participatory planning, community implementation of projects, inter-village collaboration and improved accountability mechanisms. 44. The PNPM Generasi program also supports a range of innovative activities around inclusion, frontline service delivery and local governance. The use of incentivized block grants to increase utilization of basic health and education services is being tested in 5,400 poor rural villages and the WBG is working with donor partners, the Ministries of Health and Education, and local governments to improve the quality of health and education services and foster accountability in local service delivery, as well as partnering with the Millennium Challenge Corporation (MCC) in focusing on nutrition and reducing stunting. 13 Food Security and Rural Development 45. The main delivery under the CPS is the aforementioned SMARTD, which targets to smallholders, including women producers. However, implementation of supporting infrastructure financed by the IBRD (DOISP and WISMP II), is behind schedule. In collaboration with ADB, Australia, FAO and Switzerland, knowledge services are helping to define the next medium term Plan in anticipation of rapid transformations in the economy, increasing competition for resources (land and water), and the transition for subsistence agriculture to commercially viable farming. In FY13, IFC completed a project to help to identify (i) the causes of smallholder productivity gaps and potential solutions, (ii), current company practices and guidance for community engagement and investment in the sub-sector, and (iii) best practices and funding models to assist smallholders to access certified markets. IBRD and IFC joined the Partnership for Indonesian Sustainable Agriculture (PISAgro) with IFC to lead the working group on agri-finance, and engaging a partner bank to provide a credit package for cocoa smallholders to increase productivity and farmer income. Health 46. An important program of knowledge services for health includes a series of activities that have been completed to support the GoI effort to implement universal health coverage (UHC). These include a comprehensive analysis of supply side service availability and readiness covering maternal health and non-communicable diseases, a study of human resources for health policies completed, and an analysis of measures under the universal health insurance program to help promote improved maternal health care, where Indonesia lags behind in meeting the MDG. An analysis has been completed of central government expenditures to help identify lessons and inform financing options for future expansion of UHC. An economic analysis of HIV/AIDS programs has also been completed. A second Integrated Biological and Behavioral Survey (IBBS) in Papua provinces has been analyzed and consultations are underway. Donor funding for an analysis of multisectoral determinants of double burden of malnutrition (DBM) was not realized, but the issue was brought to the attention of policymakers and the public through a comprehensive study focused on DBM in Indonesia and through the IBRD produced Indonesia Economic Quarterly (IEQ). 47. Access to clean water advanced with additional financing for the Rural Water and Sanitation Program (PAMSIMAS). Some 5.1 million people are now being provided with water and 5.6 million people with improved sanitation through the program. IFC also arranged financing of US$85 million for a private sector operator providing clean water to public water utilities. Technical support for an investment financing facility for local water companies is underway, but its establishment is likely to be delayed until the next administration. Discussion is also underway for a linked operation to support urban water supply and sanitation. PRO-GREEN – Ensuring Sustainable Development and Improving Disaster Resilience 48. Indonesia is well-endowed with natural capital and is a steward to some of the world’s greatest marine biodiversity, but its natural wealth, resources and quality of life are threatened by rapid, unsustainable development and over-exploitation of forests and marine ecosystems. Indonesia’s total greenhouse gas emissions are estimated to account for over six percent of the 14 global total. Although forestry and land use emissions are by far the largest source, Indonesia’s emissions from energy consumption are also growing, the energy mix is still dominated by fossil fuels with higher emissions. Indonesia also sits in one of the world’s most active natural disaster hot spots, and peat forest and land degradation and fires have become an annual disaster with immense economic, health and environmental impacts on Indonesia and neighboring countries. Insufficient investment in institutional capacity, lack of good governance at the local level, and inconsistent policies and practice contribute to these problems. WBG engagements seek to promote sustainable green growth, climate change adaption and mitigation, and disaster risk management whose negative consequences disproportionally impact the poor living in poor rural and marginal urban areas. Climate Change and Environmental Sustainability 49. IBRD partnering with Australia, Canada, Denmark, Finland, France, Germany, Japan, the Netherlands, New Zealand, Norway, Switzerland, and the USA is supporting important progress, including integrating environmental planning into the five-year plan for the next administration in support of their efforts to shift to a green economic growth. Indonesia has now officially joined the Wealth Accounting and Valuation of Ecosystem Services Global Partnership aimed at strengthening national environment and natural resources accounting which is considered as an integral part of its medium term planning process to strengthen the country’s ability to establish a green economy. In addition, a Partnership for Market Readiness is being designed for testing approaches and policies that help Indonesia prepare for global carbon markets and climate finance flows. IFC’s advisory services assisted the Government of Jakarta to launch the Green Building code for environmental and energy efficient buildings and IFC is supporting a local property developer committed to develop select Green buildings. Implementation of the ongoing Geothermal Clean Energy Development Project is advancing with several large tenders anticipated this year and support from New Zealand. IFC provided infra-ventures development financing of US$2 million to a wind-energy project developer in Sulawesi, the first private sector grid-connected wind power project in Indonesia. IFC is also planning to finalize an investment of US$292 million of equity, loan and mobilized financing for a hydro power project in FY14 50. Addressing governance challenges in natural resources management is a key priority. Implementing the REDD+ Initiative will help Indonesia to reduce emissions and improve governance and accountability in the forest and land sector. At the request of GoI, the IBRD has taken a lead role in supporting and advising on the establishment of the REDD+ Agency and its institutional and funding mechanisms to facilitate accessing a $1 billion grant from Norway for the REDD+ Partnership. The Ministry of Forestry is advancing on reforms to decentralize forest and land management and there has been progress in developing model forest management units. The WBG is now expanding support for forest governance, and creating enabling policy and institutional development at the national, provincial and district levels. The Forest Carbon Partnership Facility – REDD+ Readiness Project has been implemented to assist, among other activities, in developing reference scenarios and verification systems adapted to local realities. Completed in FY14, the Forestry and Non-Forestry Lands AAA which reviewed policies and issues pertaining to the allocation of land rights. The implementation of a grant from the JSDF Support Program on improving governance and participatory land mapping for indigenous 15 communities is ongoing. IFC completed the Indonesia Sustainable Forestry Project, which engaged industrial forest plantation firms, as well as the Indonesia Wood Producers Association. 51. The WBG has been leveraging international climate finance in assisting Indonesia to manage its solid waste and capture methane in the CF Makassar Landfill Gas Project and CF Bekasi Landfill Gas Flaring Project. The WBG is also supervising the HCFC Phase-Out in the PU Foam Sector Project which reduces the consumption of the compound with high warming potential and fulfills Indonesia’s obligations under the Montreal Protocol. 52. The third phase of the Coral Reef Rehabilitation and Management Program – Coral Triangle Initiative was approved, which is helping communities better adapt to climate change impacts through increased economic and ecological resilience, more sustainable local livelihoods, and education and awareness. However, the proposed Sumatra Habitat Conservation to support terrestrial biodiversity has been delayed. Disaster Risk Management 53. For disaster risk management, IBRD supported advances, in collaboration with Australia, Japan and New Zealand, were made in mainstreaming adaption and resilience, leveraging multi- donor contributions with government reconstruction spending, and setting regulations for executing sovereign disaster insurance. Six mid-sized cities and four high risk provinces are mainstreaming adaptation and resilience issues into urban development, investment and community driven development programs, water and waste management programs, agricultural and rural development programs. A disaster fund (IMDFF-DR) supported by the IBRD is a new mechanism for donor support, with contributions reaching US$5 million to leverage US$500 million in annual public reconstruction spending. As well, regulations on budget execution for sovereign disaster insurance have been formulated with initial planned coverage of US$500 million. IFC is also providing advisory services to develop a new index-based insurance to protect banks from disaster losses. CROSS-CUTTING - Gender and Governance Gender 54. As highlighted in the CPS, the program strives to significantly scale up efforts to advance the gender agenda. A Country Gender Action Plan (CGAP) identifies, coordinates and monitors activities to promote gender issues in the broader engagement with Indonesia as well as in specific operations and knowledge products. The CGAP works across four dimensions of gender equality: endowment; economic opportunities; voice and agency; and emerging risks areas. Priority engagements include financial sector development, community development and poverty targeting, education, and environmental sustainability and disaster mitigation. CGAP has met its initial target of ensuring that 100 percent of the operations delivered in FY13 were gender informed, increasing the overall level in the portfolio to 80 percent. Governance and Anti-Corruption 55. The governance program supports increasing transparency and efficiency in public financial management; greater efficiency in public service delivery; promoting open, transparent 16 competition; and strengthening subnational governments. The engagement for public service delivery focus on improved systems (including procurement) and citizen feedback mechanisms, which is being scaled up in local communities under PNPM. For checks and balances the Governance team is partnering with Indonesian institutions for strengthening accountability and those leading the fight against corruption and engaging with CSOs to reinforce these efforts. The Governance team is working with the country's Supreme Audit Institution (BPK) in deepening its focus on performance audit and strengthening its relationship with Parliament to enhance the impact of its audit reports. To promote open and transparent competition the Bank is focused on natural resources through the Extractive Industries Transparency Initiative (EITI) and REDD+. These initiatives, as well as Indonesia’s leadership of the Open Governance Partnership (OGP) and participation in UNCAC, are significant steps in demonstrating the GoI’s commitment to good governance. Indonesia has begun participating in the Global Partnership for Social Accountability (GPSA), which would create space for citizen participation. 56. IFC is promoting enhanced standards of governance in the private sector operations in the country. Toward this goal, IFC launched a new corporate governance advisory services initiative, and is working with regulatory agencies to establish model corporate governance practices and selected private sector companies. IFC assisted in developing and launching the Indonesian Corporate Governance Roadmap, which defines key principles of governance which will shape the regulatory framework for listed companies. It emphasizes transparency and seeks to strengthen the role of company boards. Complementing the roadmap is the Indonesia Corporate Governance Manual, which provides practical guidance to companies. V. PROGRAM AND PORTFOLIO PERFORMANCE Financing and Knowledge 57. The volume of IBRD financing has been as anticipated by the CPS, with around US$1.7 billion in FY13 on which it leveraged an additional US$5 billion in government budget and donor resources. Lending in FY14 is expected to reach around US$1.1 billion with another US$1 billion in FY15. As anticipated, this level of financing under the CPS would fall within the corporate limits in effect at the time. Going forward, Indonesia will be able to benefit from additional lending headroom from the recent increase in IBRD's Single Borrower Limit (SBL). In February 2014, IBRD increased its SBL for Indonesia by $2.5 billion to $19 billion, with a 50 basis point surcharge for the incremental amount. In FY13, the program generated net revenues in the order to US$42 million from spreads and fees on its IBRD lending portfolio. The large program in AAA, much of it with third party financing, is being implemented largely as anticipated. Several engagements are also now benefiting from Reimbursable Advisory Services (RAS), which amount to US$1.5 million. 58. IFC’s investments totaled about US$250 million in new commitments (including mobilization) in FY13 and are expected to increase to US$500 million (including mobilization) in FY14. IFC’s portfolio was about US$1.1 billion, of which US$188.5 million was syndicated from partners, as of January 31, 2014. IFC Advisory services for PPP transactions will continue to provide support as needed. 17 59. MIGA's approach to operations in Indonesia is consistent with its global strategy’s focus on complex infrastructure and extractive industries projects. There are currently two active projects with guarantees totaling US$257 million, in the power and mining sectors. Its Weda Bay Nickel operation supports an extractive investment in an innovative effort to engage during the exploration phase to better promote social benefits and environmental safeguards. Collaboration with Development Partners 60. The Bank Group’s engagement strong collaboration with development partners continues to be a major feature of the program. While the mix of development partners is evolving as Indonesia has reached middle-income status, concessional flows channeled through the IBRD and aligned with the Government program and CPS objectives, remain strong. Third party financing of knowledge services aligned with the Government’s program and the CPS provides for a significant collaborative effort in support of development results. Disbursement from Bank executed trust funds from donors amounted to US$27.7 million in FY13, and transfers from other IFIs reached US$2.2 million. Finally, grants for ongoing recipient executed trust funds currently total around US$484 million. Australia is predominate in terms of amounts, but significant contributions to achieving development results come from a large number of bi-lateral and multi-lateral donors, as highlighted in the discussion of individual engagement areas. Portfolio Management 61. Indicators of portfolio performance continue to be broadly satisfactory. Three-fourths of recently competed operations have met their development objectives. Disbursement rates are also at a healthy 20 percent in FY14. However, the number of problem projects has increased from 17 percent in FY13 to 25 percent in FY14. These include the aforementioned large infrastructure and institution building operations where Bank support to GoI is working to get them back on track. The number of projects rated as problems also reflects in part greater rigor in assessing performance as part of a region-wide effort to enhance portfolio quality. Beyond more realism in evaluating operations, the program includes actions in preparation, implementation, management oversight and training. VI. MOVING FORWARD Implementation 62. For the IBRD, additional lending under the program in early FY15 is expected to include a follow up in support of the financial sector, FIRM II, and additional financing in public sector modernization and investment by sub-national governments for DAK. Extension of the US$2 billion PERISAI DPL-DDO is currently anticipated as well. No further operations are expected for FY15, although preparation activities would continue on several strategic investments identified in collaboration with the current administration for possible delivery in FY16. While there are risks with this approach, the alternative of waiting until the next administration is up and running might cost almost a year lost in moving forward on urgent development challenges. 63. IFC would continue implementing a strategy of helping Indonesia reduce the impact of climate change, create high quality jobs, increase rural incomes and promote sustainable 18 urbanization. This includes programs to expand access to financial services for the underserved population, establish resource efficient and globally competitive manufacturing, increase access to infrastructure, particularly in frontier areas, strengthen commodity-based supply chains, such as agribusiness and forestry, and improve investment climate. For IFC, FY15 investments and mobilization of close to US$500 million is expected to focus areas of infrastructure, financial inclusion, climate change mitigation and supporting job creation. 64. Intermediate milestones have been achieved almost universally throughout the program and activities are well underway in contributing to the achievement of development results detailed in the Results Matrix. The only change in the results indicators is for road maintenance and development, where the IBRD’s ability to contribute has been reduced by delays in implementation of the ongoing operation and in processing an additional operation. Managing Risks 65. The risks to the program identified by the CPS remain, but are judged to be manageable and are not expected to undermine implementation of the CPS and WBG support for helping Indonesia achieve the development goals detailed in the Results Matrix. Indeed, the continued vulnerability of the economy to external shocks was aptly demonstrated in the second semester of 2013. As indicated, the measures taken at that time helped to maintain macro and financial stability and showed that policymakers have retained sufficient room to maneuver within the ongoing political environment affected by the electoral process. IFC's investments with private sector entities have heightened market risks, in line with the financial market volatility and slowdown in economic growth. IFC continues to be careful when working with private sector clients for ensuing integrity due-diligence checks 66. On the domestic front, the risk of anti-competitive measures enacted during the election period was highlighted in the CPS. The recent mining and commerce legislation have required a proactive approach on the part of the authorities to better clarify policy objectives and implementation details to reduce uncertainty among investors. The medium-term impact of these will depend on how they are regulated and implemented and the IBRD is providing authorities with analytical work on the impact under different scenarios and on alternative measures for promoting GoI’s objective of increasing value added. 67. The CPS is not expected to be adversely impacted by the future change in administration. The major candidates and their party platforms do not diverge significantly from the overall diagnostic and main thrusts of the current GoI program. Operational deliveries have been frontloaded in FY15 and ongoing operations are well underway. The team will update the Board if there is any significant change in the country context that might impact on the program. 68. Indonesia also remains vulnerable to natural disasters. During this period, events such as the recent eruption of Mount Kelud, have been localized in terms of socio-economic impacts and are being dealt with through the disaster mitigation institutions that the IBRD has been actively supporting. Localized violence and conflict also continue to plague certain jurisdictions, most notably Papua, where the Bank is supporting increased capacity at the community level. 69. Governance and corruption risks remain significant. As part of its engagement, the World Bank Group supports measures to strengthen accountability and build fiduciary capacity 19 in counterparts, as well as in strengthening their links to national institutions, such as BPKP, KPK and AGO. For the Bank Group's own portfolio, strong governance and anti-corruption action plans and close supervision remain important, including for trust-funded activities. Preparing for the Next Country Partnership Strategy 70. The ongoing DPR is provides an analysis of challenges and options that frames more specific support at the sector level by the engagement teams. It also provides a solid base of analytical work for initiating a Systematic Country Diagnosis in FY15 and contributing to Indonesia’s next Five-Year Development Plan. As well, a full set of knowledge services is underway to help support this effort and to be used as the basis for dialogue with the incoming administration. A Country Partnership Framework with the new administration is expected to be presented in FY16. 20 VII. APPENDICES AND ANNEXES Annex 1: Indonesia CPS FY13-15 Results Matrix Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones Pro-Growth – Promoting Prosperity Connectivity Accelerate growth and Lack of policy coordination -Introduction of a set of Financing: Connectivity 1. Improved ranking of Indonesia’s domestic logistics indicators for enhance equity through to implement policy reforms Logistics Performance Index. DPL I & II delivered, IFC domestic connectivity in the connectivity agenda monitoring progress in logistics US$50 million to Protelindo, Baseline: in 2012 Indonesia ranked policy reform. [On track – a telecom tower operator; IFC Regulatory barriers that at 59 National logistics team has financed Wintermar to inhibit better provision of presented draft indicators] procure offshore service connectivity services 2. Increase access for broadband vessels, Knowledge: analytic internet services for population. -Effective functioning of the and advisory work ongoing Inefficient use of public Connectivity Working Group funded by AUSAID and finance and management Baseline: 5 percent in 2011 and National Logistics Team. MDFTIC (Dutch, Swiss, and practice for provision of [On track – Action plan USAID); ESW on logistics connectivity infrastructure Target: 30 percent by 2015 identifying 15 quick wins] and trade facilitation; policy -Improved services in domestic notes on logistics, regulatory 3. Reduced cost and time to export cargo shipping. [On track – reform, managing openness. and import, as indicated in the Doing Port Masterplan and 30 AAA on ICT regulatory Private sector participation Business Survey individual plans prepared] reform underway. not being leveraged for the agenda of growth and Baseline: 2012: Export: 17 days, connectivity US$644 per container; Import: 27 -Increased private sector days, US$660 per container participation in logistics and telecom/ IT services [On track – Ports for Makassar and Surabaya tendered; broadband project for Eastern Indonesia underway] 21 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones Competitiveness Enhance Bottlenecks and 1. Policy framework adopted to - Coordinated Financing: Connectivity I & competitiveness underdeveloped in trade improve competitiveness through implementation of the National II and FIRM DPL delivered; . through improved logistics are hurting better trade logistics, Baseline: Score Logistics Blueprint [On track IFC financed Wintermar’s environment, including profitability and undermining in 2012 Logistics Performance – Action plan identifying 15 procurement of offshore open, competitive, firms’ productivity; complex Indicators (LPI) for logistics quality quick wins] service vessels, helping to sustainable and regulatory environment competence of 2.85 for border service oil and gas sector in inhibits private sector management of 2.53, Target: - Development of Standard frontier regions of the inclusive markets for investment; time consuming Improved 2014 LPI score on Operation Procedure and country. IFC US$375 million business to expand and and costly procedures to logistics competence of 3.00 and improvement of the capacity of loan financing and increase productivity establish companies, and border management of 2.7, National BKPM (Investment mobilization support for clear imports; weak Single Window acting as the single Coordinating Board) Investor Indorama’s fertilizer facility coordination among reference for cross-border trade and Relation Unit to handle investor in Nigeria – Eleme government institutions for introduction of single sign-on for all inquiries. [On track – Fertilizers. IFC financed the investment policy; pressure to participating agencies investment facilitation Wings Group’s detergent use protectionist measures to reforms moving beyond IR plant in Nigeria through loan protect domestic vested Unit] financing. interest; private sector companies are undertaking 2. Improved regulatory - Development of the legal Knowledge: AAA supported projects which will not be environment, interagency framework to streamline by MDFTIC to drive policy cost-competitive versus coordination, and consultative current procedures and reduce reforms in logistics and trade global competition in their process in business environment that delays in small claim resolution facilitation, enhance reform target markets; policy affect competitiveness of Indonesia’s [On track – Broader Doing agenda to improve the decisions are taken without private sector, facilitate innovation Business reforms underway] business regulatory sufficient analysis of and investment facilitation and environment; IFC Advisory alternatives and of their costs services. Baseline: 50 days to start a - An implementation plan for Services – Investment and benefits inadequate company; 570 days to enforce reforms to reduce the cost of Climate Program (sub- infrastructure and incentive contract; weak consultative starting a business is adopted national Doing Business; regime have limited capacity processes prior to issuance of [On track – implementation corporate governance; and have not encouraged regulations; uncoordinated underway] financial infrastructure) innovation in private sector. investment policy; weak investor Innovation, Investment inquiry handling Targets: 30 days to - Strengthened interagency coordination and public Generation Technology, and start a company; less than 500 days Entrepreneurship; Report and to enforce contract; coordinated consultation around business regulatory process. [On track – policy dialogue on investment policy and improved Indonesia’s manufacturing with Oct ’13 policy package] 22 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones transparency in regulatory making; sector; Report and policy improved performance of investor -IFC supporting companies dialogue on managing inquiry handling which are cost-competitive in openness. the exports markets or are cost competitive with imports in domestic markets [On track] Financial Sector Promote the Banks intermediation has 1. Maintain financial sector -Bank financial ratios remain Financing: FIRM DPL development of a stable, improved but it is still low to stability, deepened financial sector sound: CAR higher than 8%, delivered; IFC committed efficient and inclusive the size of economy; Bank and strengthened private sector NPLs do not exceed 5%. [On loans of up to US$75 million financial sector in loans need to increase further through: improved regulatory and track – as of Nov 2013 CAR to Bank Danamon and up to Indonesia in order to to support economic growth supervisory frameworks; maintained 18.7% and NPL 1.9%] US$30 million to Bank Hana foster accelerated soundness of banking sector. Indonesia for expanding economic growth, Non-Bank Financial -Bank lending increasing by access to finance for SMEs, reduce poverty and Institution (NBFI) assets need Baseline: Key financial ratios of twice GDP growth rate and provided financing of up strengthen economic to growth further to increase banks (Capital Adequacy Ratio annually; LDR remains at to US$8.9 million for Mitra competitiveness on a efficiency and reduce risk in (CAR), Non-Performing Loan ratio minimum 80%. [On track – Bisnis Keluarga Ventura sustainable basis. financial sector and create (NPL), Net Interest Margin (NIM) growth in 2013 of 21%; LDR (MBK), a micro-finance long-term domestic financial are sound and LDR (Loan to Deposit at 89.9% as of Nov 2013] institution in Indonesia. resources/savings Ratio) is 75% ( Dec. 2011); Further financial support to -NBFI continues growing and Bank Tabungan Pensiunan Persistent issues of limited Targets: Banking financial indicators maintains 20% share of Nasional (BTPN) is expected access to finance for remain sound and LDR at minimum financial assets; amount of to be committed in FY14. underserved groups (MSMEs 80%; funds raised from equity and IFC supported BTPN in and households) bonds market increases conducting pilot program for 2. Growing capital market and annually [On track NBFI at a new financial instrument for NBFI and a higher access to formal 20% as of Nov 2013; 17.7% extending micro-lending to financial services by the Micro- increase in 2013] small farmers. IFC joint pilot Indonesia’s new Financial SMEs and underserved populations to extend micro-housing Services Authority( OJK) - Continued increase of KUR loans is under development in must function effectively as Baseline: 41% of households have annual disbursement; increased partnership with Holcim the integrated financial sector access to bank accounts; banking in account holders of Indonesia (a leading cement authority; the transition loan to SMEs is 50% (2011), Tabunganku ( “no frills” basic sector company) and Bina period has to be managed disbursed KUR (credit program for savings account product) [On Artha Ventura (a micro- 23 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones properly SME) amounted to IDR 63 trillion track – KUR exceeded target finance institution). (2011) in 2013; 4.7 million new The financial safety net account holders] Knowledge: Financial Sector framework and legal basis for Targets: Bank loans to SME Policy dialogues; Financial financial crisis management continue to grow and are maintained - OJK is operational and the Sector Assessment Program need to be strengthened; at 50% of total bank loans; Financial System Stability (FSAP); Microinsurance proportion of households with Coordination Forum is Marketplace; Review on Limited local infrastructure savings account increased functioning. [On track – OJK KUR (Kredit Usaha Rakyat); financing capacity operational as of Jan 2014; Deposit Insurance Company FKSSK meeting quarterly] (LPS); Improving access to Financial Services in - Infrastructure Finance Indonesia Empowering Facility is providing long term Female Migrant Workers; financing for infrastructure support to establish OJK; projects [On track – IIFF Fiscal Policy Office on leveraged IDR 2.5 trillion in developing a crisis 2013 for projects in telecom, management protocol ; transport and energy] Saving and Loan Cooperatives; SME access to Islamic Finance; Capacity building of Secretariat of Financial System Stability Forum; IFC Advisory Services – Access to Finance Program in the areas of SME banking (women in business), mobile banking, and housing micro finance, as well as in Investment Climate Program including ongoing support to Credit Bureau and Moveable Collateral registry. 24 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones Infrastructure Increase the level and Lack of investment in 1. Increased effective km of - Incentive framework for PLN Financing: Investment; efficiency of public and infrastructure, which has not national roads maintained and introduced to increase Infrastructure Guarantee private investments in kept pace with economic developed. efficiency and reduce subsidy Fund and Power infrastructure to meet growth; investment in requirement. [On-going] Transmission II delivered; needs and strengthen infrastructure fell from about Baseline: 1500 km maintained Investments by IFC in competitiveness. 6% of GDP in 1997 to 2% in through betterment works and 3000 -Government Viability Gap renewable/ clean power, 2000, but recovered to about km developed (2005) Funding mechanism established water and sanitation, ports, 4% of GDP by 2011 and operational. [On track – shipping and logistics, Target: Increase by 1 /year over VGF used for Lampung and telecom, oil and gas 2011-2015 period. Umbulan water supply, and Jakarta airport railway] Knowledge: Assessment of Indonesia’s infrastructure 2. Reduced power infrastructure Road Construction Industry; delivery requirements are bottlenecks to meet demand and - Increased capacity of power Roads and Railways PER; massive, and beyond what increase access transmission substations by Advisory service on energy can be supported through Target: Reduce power supply 14%. [On track – increased service and subsidy; PPP public investment alone interruption time per customer from by 7.6% in 2012] Framework and Policy; 5h/year to 2h/year (2012-2015). Viability Gap Financing; -At least one PPP transaction in Low-income Housing Policy 3. Increased private investment in bulk water. [On going – and Finance; Geothermal infrastructure through the PPP expected to be on track before Power Supply; IFC Advisory framework end of FY] services for structuring and bidding Public Private Partnership projects. Local Government Strengthen local government institutions to improve Insufficient coordination and 1. Improved fiduciary, social and -PEACH transparency and Financing: Local accountability and leadership of the environmental management as well accountability components Government and increase the level and of decentralization agenda at the as technical performance of LGs in enhanced and expanded Decentralization Project central level; a limited and the delivery of basic services (DAK) I⁡ Urban Sector 25 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones impact public spending unclear role for the provinces financed using DAK transfers. -PEACH expanded to Development and Reform on service delivery and additional provinces Project (USDRP) support metropolitan A fiscal decentralization areas and medium-sized framework that does not - Output based disbursement Knowledge: Report on cities to improve provide appropriate 2. Improved capacity of research approach pioneered under the Urban Agglomerations; infrastructure incentives for increased and institutions, media and CSOs to LGDP/DAK Reimbursement PEACH PERs; PEACH PFM higher quality spending assess and monitor sub-national .[Operation expected shortly, Technical Assistance and PFM (PEACH): enhanced capacity but as investment operation.] Capacity Building activities; Weak capacity of local of local institutions to analyze and Sulawesi Development governments (LG) to manage monitor public expenditure and PFM -Government financing and Diagnostic Report; assets and service delivery and to demand better local technical assistance framework Subnational Workshops on government performance in these for engagement with Gender responsive Budgeting An inadequate framework for areas metropolitan areas in place and Planning and insufficient financing of multi-year large scale IFC Advisory services for infrastructure programs Sub-National Doing Business reforms and PPP structuring Lack of coordination in for local governments. planning, management and investment at the metropolitan and regional in larger urban agglomerations Macroeconomic and Fiscal Management Indonesia’s fiscal financing 1. Enhanced Government ability to -Indonesia maintains continued Financing: INSTANSI I & II Strengthen central position remains vulnerable meet its financing needs and access to market financing delivered. Program for government capacity for to changes in investor maintain critical public expenditures, (meeting the targets in its 2012 Economic Resilience, implementing sentiment. as measured by continued access to Financing Plan). [On track – Investment and Social contingency financing, markets, and level of maintenance targets met for 2012 and Assistance in Indonesia crisis management and Despite Indonesia’s strong and capital expenditures. 2013] (PERISAI) ongoing quality evidence-based recent economic performance, significant 2. Budget allocations informed by -In the event of a crisis the Knowledge: Development macro and fiscal policy challenges in fiscal and monitoring and evaluation. Increase Government is able to use Policy Review; Support for macro policy remain in terms in the number of line ministries and provisions in the Budget Laws Enhanced Macro and Fiscal of the allocation of spending agencies reporting through BRISA to revise expenditures and/or Policy Analysis institutional (with subsidies accounting for (the monitoring and evaluation financing sources under strengthening program; 26 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones almost one quarter of central system) from a baseline of zero in streamlined parliamentary Analytical and Capacity government spending in the FY11. approval process. [On track – Support to Improve proposed 2013 Budget) and provisions included in 2013 Expenditure and Revenue its efficiency and 2014 budgets] Policy including public expenditure review analysis; -Development and usage of resource revenues policy and medium-term forecasting tools administration technical which integrate macro and assistance; Indonesia fiscal outlooks. [On track – Economic Quarterly report forecasting tools in place] -Improved mechanisms for policy based review and reallocation of budgetary spending. [Ongoing – M&E processes being developed for future budgets] Strengthening the Public Sector The budget system is input- 1. Strengthened multi-year -Increased correlation Financing: INSTANSI Strengthen central based, excessively detailed perspective in fiscal planning, between forward estimates and DPLs; Management and government institutions and inflexible and strictly expenditure policy and budgeting annual budgets. [Ongoing – Revenue Administration and systems to enhance annual, hampering Baseline: PEFA PI-12 rating C+ in Baseline review in 2014 to Project (GFMRAP); Project public financial implementation of multi-year 2011 improve quality of budgeting] for Indonesia Tax management and projects Administration Reform Target: improve PEFA PI-12 rating - Professional association of (PINTAR); Scholarships governance to increase Controls in budget execution to at least a B+ by 2015 internal auditors and drafts of Program for Strengthening the development impact processes are generally (a) code of ethics and (b) Reforming Institutions of priority budget 2. Number of line ministries inadequate and could internal audit standards Project (SPIRIT); expenditures. receiving unqualified opinions for jeopardize gains from established. [Completed] STATCAP-CERDAS improvements made in other their annual financial statements: areas of PFM -New regulations for adoption Knowledge: Public Financial Baseline: 63% of Ministries and of accrual based accounting Management (PFM) Multi The public procurement Agencies in Financial Statement. policies and chart of accounts Donor Trust Fund (PFM system is deficient as is the issued. [Completed] MDTF); capacity of procurement Target: 85% of Ministries and 27 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones practitioners; collusion and Agencies in Financial Statement for - Single public financial corrupt practices in the FY2013 management information bidding process continue to system for national government exist, causing leakages and 3. Implement new Financial provides reliable, timely losses in the system Management Information System in information on all stages of all 177 Treasury Local Offices budget execution, including Increasing demand for commitments, in readiness for improved quality, timeliness move to accrual accounting in and responsiveness of data 2015. [Completed in 2013; 37 availability are hampered by of 177 offices now using] poor ICT infrastructure and data management and inefficient business processes Pro-Jobs – Enhancing Skills and Technology, and Improving Social Protection Education - Increase in the number of pre- Provide good quality Despite significant increases 1. Improved education quality and service teacher training Financing: BOS-KITA II, education to all in education spending the performance of teachers; Increased programs accredited.[On Early Childhood Education Indonesians and to quality of education remains number of basic education teachers track] and Development (ECED); produce a smart and low meets academic qualification Better Education through competitive workforce. mandated by the Teacher Law - Nationwide implementation of Reformed Management and Enhance research and Low participation rates in revised policies, plans and Universal Teacher Upgrading development, science early childhood education and Baseline (2011): 35% of teachers in procedures for continuing (BERMUTU); Indonesia and technology development programs primary and 80% of junior secondary education and career Higher Education for schools hold S1 degree or more. development of teachers. [On Relevance and Efficiency Low teacher competency (IMHERE); Research and track] Target: 82% of primary and 98% Innovation in Science and Inefficient allocation of junior secondary school teachers Technology Project (RISET); public education spending hold S1 degree or more. [Target Knowledge: The Role of revised based on updated baseline - Development of a skills Politics and Evidenced Based data] training fund supported by Policy Making: The Case of government and the private Teacher Reform in Indonesia; 2. Improved public R&D human sector [On track] Education PER; Indonesian 28 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones resource capacity. School Grants Program - Guidelines for district level Review; Local Governance Weak management of Target: Masters or PhD degree performance and equity based Capacity Assessment Survey; education at the district and holders in public research institutes school grants developed Survey Video Study; Impact school level under incomplete (LPNK) increases from 15% to 17% [Completed] evaluation of teacher decentralization framework LPNK institutional assessments certification; Impact completed and reform milestones set - Staffing standards for basic evaluation of ECED project Weak links between education schools revised with a focus on school education sector and labor [Delayed] readiness; Projections and market including skill assessment of skills demand; mismatches and weak firm -Strengthened capacity of Higher education studies on based training RISTEK management to funding modalities and labor enhance the quality and market linkages, Indonesia ranks poorly on relevance of strategic industry- Infrastructure assessment, competitiveness and research consortium funding. Accreditation and quality knowledge economy indices [On track] assurance and equity and access to higher education; Research and Development -A new competitive research TA on skills development (R&D) outputs remain low funding system for RISTEK fund; Support for 2015 five compared to other countries designed [On track] year development; in the region Strengthening Public Financing of Indonesia's Knowledge Sector; ICT in Education; Building capacity awareness on safe schools. IFC advisory services to train famers for improving their yields and to financial sector employees for launching new financial products 29 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones Social Insurance Provide universal Only 50% of the population 1. Conversion of Jamsostek to a - Roadmap covering SJSN Knowledge: Advisory coverage of social currently has health insurance not-for-profit institution that can pension and old age savings services to Bappenas, DJSN insurance to protect and only about 12% of the administer the SJSN pension and old programs completed [Bank has (national social security workers and the poor population has any kind of age savings programs completed its section of the council), the Ministry of from adverse life events pension, old age savings, roadmap; entire roadmap Labor, the Ministry of or external shocks death benefit or work 2. Expand membership and improve expected to be published Finance and others through the five accident insurance. contribution collection from the shortly] national social formal and informal sectors. Pension and old age savings insurance (SI) programs Complexity of assuring fiscal -Design and financing strategy, roadmap outlined in the SJSN sustainability including including investment policy, for (national social security proper investment of program SJSN pension and old age Draft White Paper on SJSN system) Law and the assets savings plans finalized. [On pension completed. Others in BPJS (national social track – Bank has prepared progress) security administrators) Need to quickly transform the paper of design and Law, covering all legal structure and business financing] Background papers on formal and informal processes of the retirement age, coverage of sector workers. administrators -Legal and organizational the poor in employment transformation of Jamsostek to programs, and use of surplus Complexity of expanding BPJS Employment completed. in administrators and social membership and collecting [On-going Bank is in the insurance funds completed) contributions from the formal process of preparing a paper and informal sectors and on financial reporting and Modeling completed. Input properly tracking those accounting for Jamsostek and files needed for testing contributions over time BPJS Employment with focus alternative assumptions and on accounting procedures for designs in place Lack of government capacity shutting down Jamsostek and and experience with for the start-up of BPJS Development of Policy Notes managing the risks of SI Employment]. on various aspects of SJSN programs. (five Policy Notes completed -Membership expansion and and published so far) contribution collection strategy completed. [On-going – firm being hired to assist with the development of the 30 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones contribution collection strategy for the informal sector] -BPJS Employment begins administration of current PT Jamsostek benefit programs for the current covered group. [On track] Pro-Poor – Promoting Communities, Protecting the Vulnerable and Improving Health Outcomes Poverty Targeting Reduce absolute Around 110 million people 1. National shock monitoring -Design and protocols for shock Financing: INSTANSI DPL; poverty and improve still live under US$2 a day system developed and operational. monitoring system are ECED STATCAP-CERDAS, income distribution (Bank estimate); large developed. [On track Systems and IFC investments into through social number of urban and rural 2. Poverty programs management in place, protocols expected microfinance institutions protection that is based poor due to lack of income units using the national registry of after July 2014] on the family, and inadequate productive poor and vulnerable households to Knowledge: AAA supporting community employment opportunities; identify beneficiaries. -Data sharing agreements are Household shock monitoring empowerment and lack of quality service in place. [On track – under and response project; expansion of economic delivery to poor people; Target: 4 programs by 2015 discussion] integration of poverty opportunities of the low access to early childhood reduction programs; social income population. education remains low, 3. Increased participation in ECED -Memoranda of Understanding assistance reform; PNPM From 12% poverty in particularly for the poor; wide services particularly for the poor (MOUs) in place with Rural Economic Impact 2012, Government is regional disparities implementing agencies Simulation; Village Baseline (2010): Gross enrollment agreeing to use the national Infrastructure Census; targeting for single (particularly, eastern rate of 33 % of 4-6 year olds enrolled registry. [Completed] Incidence of Benefits of digits by 2014. provinces); poor are in ECED Households; IFC advisory vulnerable to shocks such as food price increases, natural -Conditional cash transfer services for small farmers and Target: 72% program (PKH) expansion disasters out-growers. strategy is approved. [Competed – approved and 31 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones expansion begun] Number of poor households receiving conditional cash transfers increased from 720,000 households (2010). [On track – 2.4 million as of 2013] Community Development Community Development 1. 2.5m community members -CSOs engaged in improving Financing: PNPM Rural IV; Improved local-level through the PNPM program participate directly in meetings; 80% access to services, livelihoods PNPM Rural 2012-2015; (sub-districts and has been expanded to reach beneficiaries feel that project and rights of marginalized PNPM Generasi;; PSF villages) governance, over 60,000 villages. Impact investments reflected their needs; groups (target: 90 CSOs) [On MDTF; JSDF; KDP quality of service evaluation shows it to be an >50% of poorest communities track] Sulawesi; Justice for the delivery and socio- effective program, but it involved in planning and decision- Poor; CPDA; IFC investment economic conditions in needs to consolidate program making meetings; 35% of villages -Increasing provision of in MBK is expected to assist rural areas through management, enhance provided feedback on health and holistic and integrated ECED this micro-finance institution wider implementation participation, particularly by education services) services for the poor [On to reach one million low- of poverty reduction women and marginalized track] income women entrepreneurs and community groups. 2. Women actively involved in at the base of the pyramid by empowerment programs decision-making (target: 50% of 2017. and the provision of women in planning/decision-making investment resources to meetings; 30% of women in Knowledge: PNPM Rural support proposals community oversight teams) Economic Impact Simulation; developed by Village Infrastructure Census; communities, using a 3. Improved community access to Incidence of Benefits of participatory planning and utilization of health and Households; Local Level process. education services in the targeted Institutions III; Community areas. Management of Development Enhance access to Portfolio; Revolving Loan health and education Targets: >80% of pregnant women Fund Study; Governance receiving 4 prenatal care visit; 80% Review; Integrated MIS for 32 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones services among the poor of children under 5 weighed PNPM; TA to Pokja monthly; 50% of pregnant women Pengendali, Bappenas, attending nutrition counseling KPDT; TA to Aceh Local session; 50% of caregivers of Government; Papua children under 2 attending nutrition analytical work; PNPM Rural counseling session; 70% junior Sentinel Village Study secondary enrollment rate Food Security and Rural Development The policy of rice self- 1. Modernized client and market Increase food security sufficiency limits the amount oriented marketing and extension and continue the of resources available for services accessible by smallholders. -10% of IAARD’s research and Financing: Farmer revitalization of farm diversification and Baseline: less than 10% of farmers’ management staff undertakes Empowerment through agriculture to enhance agricultural development advanced training in accredited Agricultural Technology and self‐reliance in food, access technology and market systems. information through ICT. foreign institutions. [On track] Information (FEATI) increase the competitiveness of Sustainable Management of Limited access to technology 2. Increased value addition in -MoT launches Action Plans Agricultural Research and agricultural products, and marketing services due to increase the income smallholder-based agricultural export for enhancing the sustainability Technology Dissemination weak capacity of local and value chains (e.g. coffee, cocoa, and and competitiveness of at least Project (SMART-D); Water level of farmers, and national government R&D conserve environment tea) coupled with higher productivity one small-holder based Resources and Irrigation and extension services and more efficient marketing beverage crop (e.g. coffee, Sector Mgmt; Dam and natural resources prevents the emergence of systems. Baseline: Regulatory and cocoa, or tea). [On track] Operational Improvement; viable agribusiness policy framework of value chains of IFC investments in Reduce dependence on enterprises and farm smallholder-based exportable -The Government issues a agribusiness companies with imports for staple foods diversification. commodities is weak with low service oriented irrigation a view to enhance food while diversifying food consumption capacity of support systems. policy and establishes a concept security or to provide Commodities are exported for modernization of irrigation sustainable livelihoods to with limited domestic value 3. Improved water resource and management. [On track] Improve income of poor farmers IFC’s support to addition and issues of quality, irrigation and planning and smallholders and the Wings Group allowed the market positioning, and coordination mechanisms expand opportunities Group to successfully launch competitiveness in the value established. for nonfarm income new food and nutritional chains persist. activities. products Target: Water security improved in Mechanisms to promote 33 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones improved service provision at least 50 irrigation Districts. Knowledge: TA on Food and planning in irrigation and Security to MoA; TA to the water resources management MoPW on irrigation not yet operational. management modernization and policy development IFC advisory services work in sustainable palm oil to improve sustainable livelihoods for outgrowers Health Outcomes Improved population High out-of-pocket spending 1. Quality assurance policies -Comprehensive analysis of Financing: Ongoing and health outcomes, for health. governing the education of health supply side availability and delivered: Health including improvements professionals with establishment of readiness. [Completed]. Professionals Education in life expectancy and Low and variable levels, independent National Accreditation Quality; PAMSIMAS AF; reductions in maternal distribution and supply of Agency, and National Agency for -Study of human resources for Urban Water Supply & mortality and health services, especially in Competency; accreditation of 7 health (HRH) policies Sanitation TF; GPOBA malnutrition to meet poor and rural areas. health professional schools. completed. [Completed]. Jakarta and Surabaya ; MDG targets by 2015 WASAP; IFC arranged Rising HIV/AIDS epidemic, 2. 7 million people provided with -Analysis of Jampersal / financing of US$85 million Access to safe water especially in select provinces piped water supply and 3.4 million Jamkesmas policies to achieve for Moya Water, a private and sanitation is a major people provided with improved UHC of maternal health care. sector operator providing factor in the health and Slow reduction in maternal sanitation under PAMSIMAS [Completed] clean water to Tangareng and overall welfare of mortality, despite relatively other public water utilities. Indonesians and high levels of skilled birth -Second Integrated Biological expanding coverage is a attendance and institutional and Behavioral Survey (IBBS) priority deliveries in Papua provinces. [Completed] Knowledge: Policy dialogue Chronic malnutrition and on universal health coverage; stunting rates -Economic analysis of supply side availability and HIV/AIDS programs. readiness assessment; HRH Access to safe water has [Completed]. study; HIV/AIDS IBBS stagnated since 2001 at less survey; HIV/AIDS economic than half the population, in -Analysis of multisectoral 34 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones particular urban coverage determinants of double burden analysis; DBM analysis. from 60 percent to about 50 of malnutrition (DBM) percent by 2009 [Comprehensive DBM study Total Sanitation and completed]. Sanitation Marketing, Urban Access to sanitary facilities Wastewater Management; significantly lower than other -Financing facility established Surabaya water policy advice; comparable countries in the to support PDAM technical WASAP; Water and region assistance and investments. Sanitation Financing [Delayed until FY15] Program; Assessment for Water Financing Facility; -National expansion of the total Lampung water project TAs. sanitation and sanitation IFC advisory services for marketing (TSSM) structuring water sector PPP programmatic approach to projects sanitation into a national program targeting 20,000 villages. [Completed through PAMSIMAS] 35 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones Pro-Green – Ensuring Sustainable Development and Improving Disaster Resilience Environment, Natural Resources and Climate Change Deforestation, peat burning, 1. Fund for REDD established with - Green Growth Development Financing: Conservation and utilization of the natural habitat loss; globally legal, technical and managerial concept is embedded in the REDD+ Support Facility environment that significant emissions: forests capacity to support and finance RPJMN 2015-2019 [On track] MDTF; Green Growth supports sustainable and land use change. Indonesia’s National REDD+ - REDD+ Strategy is Development Support economic growth and Strategy Fragmented, overlapping and implemented at national, sub- Program (possible MDTF); increased welfare of the FCPF Readiness Grant; people decentralized land use 2. Phase III of COREMAP national, and community levels authority hampers ability to providing expanded support for coral [On track] AMAN – Grant with JSDF manage forest and peat lands and marine protection. Support; AAA on Mapping GHG emission - Forest Management Unit and Customary Land rights; reduction of 26% by Climate change: threat to 3. Government of Jakarta launching Program is nationally FIP Forest Management 2020 accompanied by development, especially the green buildings code for commercial implemented and governed [On Development Project; FMU the control and poor; vulnerability in buildings in the city. track] support system MDTF (co- management of disaster agriculture, water funding FIP fund); DGM for risks, in order to prepare management, health, -Increased financing for Indigenous Peoples and Local for the expected preparedness, resilience terrestrial biodiversity Communities (FIP fund); impacts of climate [delayed] Dayak development Project – change. Great renewable energy Grant with JSDF Support; Promote renewable potential relatively untapped - Geothermal investments under Partnership for Market energy sources as part due to need for improved implementation [On track] Readiness (PRM) grant; Indo- of a sustainable pricing and investment WAVES Program; HCFC development strategy climate incentives Phase Out Management Plan; COREMAP CTI Phase 3; Power sector is fastest CCRES (GEF); Solid Waste growing source of emissions, Management Improvement mainly from coal based Project for Regional and power generation Metropolitan Cities; Landfill Gas Recovery project. Lack of coordination of policies and incentives for IFC completed the four-year 36 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones environmental improvement Indonesia Sustainable and climate change Forestry Project, with mitigation; weak economic industrial forest plantation incentives; policy distortions firms and the Indonesia Wood Producers Limited incentives for firms Association,. COREMAP III to develop forest plantation delivered, Ongoing IBRD and climate change mitigation project and IFC supporting program on degraded geothermal investment. IFC grasslands and to apply best supported for Ciputra practices because of high Developments, for select costs and risks, as well as Green buildings. lack of knowledge and experience in blending forest- Knowledge: based climate change mitigation and commercial REDD+ Advisory Services forestry investment on FREDDI (AAA and TA); REDD+ Support Facility to support National REDD+ implementation; Policy dialogue and AAA on Green Growth Development Support to BAPPENAS on key policy recommendations for the next RPJMN; AAA on Forest and Non-Forest Land; AAA on fisheries management and coral/marine ecosystem values; Forest Carbon Partnership Facility (AAA and TA); WAVES Program to support Green Development Agenda; AAA on Benefit Sharing, TA and Inputs to ongoing Partnership for Market Readiness (PMR), 37 Indonesia’s Longer-term Issues and Obstacles Development Results To Which the Intermediate Indicative WBG Modes of Engagement Objectives WBG Will Contribute Development Milestones AAA on mapping, and customary land Rights ,IFC advisory services in areas of clean energy development, sustainable energy finance, green banking, sustainable forestry/ agribusiness, green building development etc. Disaster Risk Financing: Ongoing Zero Management Contingent and Disaster Mitigation Components in Enhance capabilities to WINRIP and PNPM Urban Duplication of efforts due to 1. Create evidence-based examples improve disaster risk the plethora of development -Mainstreaming adaptation and III; PNPM Rural III AF preparedness, of practical and concrete disaster and resilience issues into urban partners in Disaster Risk climate risk reduction and adaptation mitigation measures, development, community Knowledge: GFDRR Reduction (DRR); new measures (e.g., safer schools, and post-disaster driven development programs, National risk assessment Disaster Management resilient villages and urban wards recovery and water and waste management study/mapping as the basis Agency structure may not with DRR plan and investment reconstruction programs, agricultural and rural for GoI’s National Disaster have the capacity to program) that can be scaled up and responsiveness to development programs [On Management Plan 2009-2014 mainstream DRR replicated nationally strengthen sustainability track] and National Action Plan for DRR 2009-2014. Indonesia 2. Community-based settlement -GoI led disaster fund (IMDFF- Disaster Risk Financing reconstruction incorporated as a DR) as new mechanism to Study and policy dialogue, Government program institutionalize donor support Capacity Building module on PDNA and Post Disaster Recovery; IFC advisory services to PT Asuransi Maipark Indonesia to develop a new index-based insurance product called Earthquake Index Insurance 38 Annex A1: Key Economic & Program Indicators As of Date 5/21/2014 Forecast in Last CAS Actual Current CAS Forecast Economy (CY) 2012 a 2013 b 2014 b 2015 b 2012 2013 2014 2015 Growth rates (%) GDP 6.1 6.3 6.6 6.6 6.3 5.8 5.3 5.5 Exports 2.8 5.7 11.0 10.2 2.0 5.3 5.7 5.3 Imports 7.1 4.7 11.8 11.7 6.7 1.2 4.8 6.9 Inflation (%) 4.4 5.1 5.0 4.8 4.3 7.0 6.2 5.2 National accounts (% GDP) Current account balance -2.3 -1.6 -1.7 -0.9 -2.8 -3.3 -2.9 -2.1 Gross investment 33.3 34.5 35.4 36.6 32.7 31.7 33.9 33.8 Public finance (% GDP) Fiscal balance -2.4 -1.7 -1.4 -0.5 -1.9 -2.2 -2.6 -2.1 Foreign financing 0.7 0.6 0.7 0.9 -0.3 -0.2 -0.5 -0.4 International reserves (as months of imports) 4.3 4.5 4.7 4.7 5.4 4.8 4.3 4.0 Program (Bank ’s FY) FY13 FY14 FY15 FY13 FY14 FY15 Lending ($ million) 2,048 750 650 1,701 1,072 1000 Gross disbursements 1,000 1,000 1,000 890 1,100 1,322 ($ million) a. Estimated year b. Projected year 39 Annex A2: Indonesia at a Glance Indonesia at a glance 5/30/14 East Lower Key Development Indicators Asia & middle Age distribution, 2012 Indonesia Pacific income (2013) Male Female Population, mid-year (millions) 249.7 1,992 2,507 75-79 Surface area (thousand sq. km) 1,905 16,304 20,742 60-64 Population growth (%) 1.1 0.7 1.5 Urban population (% of total population) 51 50 39 45-49 30-34 GNI (Atlas method, US$ billions) 868.8 9,728 4,745 15-19 GNI per capita (Atlas method, US$) 3,480 4,884 1,893 GNI per capita (PPP, international $) 4,730 7,758 3,877 0-4 10 5 0 5 10 GDP growth (%) 5.8 7.5 4.7 percent of total population GDP per capita growth (%) 4.6 6.7 3.2 (most recent estimate, 2005–2012) Poverty headcount ratio at $1 .25 a day (PPP, %) 16 12 27.1 Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 43 30 56.3 Life expectancy at birth (years) 70 74 66 90 Infant mortality (per 1,000 live births) 26 17 46 80 Child malnutrition (% of children under 5) 19 5 24 70 60 Adult literacy, male (% of ages 15 and older) 96 97 80 50 Adult literacy, female (% of ages 15 and older) 90 92 62 40 Gross primary enrollment, male (% of age group) 107 111 107 30 Gross primary enrollment, female (% of age group) 111 113 104 20 10 0 Access to an improved water source (% of population) 84 91 88 1990 1995 2000 2012 Access to improved sanitation facilities (% of population) 59 67 47 Indonesia East Asia & Pacific a Net Aid Flows 1980 1990 2000 2013 (US$ millions) Net ODA and official aid 941 1,716 1,653 68 Growth of GDP and GDP per capita (%) Top 3 donors (in 2012): Australia 48 77 72 606 15 European Union Institutions 1 12 38 135 10 United States 117 31 174 131 5 0 Aid (% of GNI) 1.3 1.6 1.1 0.01 -5 Aid per capita (US$) 6 1 0 8 0.3 -10 -15 Long-T erm Economic T rends -20 95 05 Consumer prices (annual % change) 9.5 7.7 3.7 7.0 GDP implicit deflator (annual % change) 31.0 7.7 20.4 4.4 GDP GDP p er capita Exchange rate (annual average, local per US$) 627.0 1,842.8 8,421 .8 9,836.0 Terms of trade index (2000 = 100) .. 107 100 151 1980–90 1990–2000 2000–13 (average annual growth %) Population, mid-year (millions) 145.5 178.6 208.9 249.7 2.1 1.6 1.4 GDP (US$ millions) 78,013 114,426 165,021 923,546 6.1 4.2 5.6 (% of GDP) Agriculture 24.0 19.4 15.6 14.4 3.6 2.0 3.5 Industry 41.7 39.1 45.9 45.7 7.3 5.2 4.3 Manufacturing 13.0 20.7 27.7 23.7 12.8 6.7 4.7 Services 34.3 41.5 38.5 39.9 6.5 4.0 7.5 Household final consumption expenditure 51.4 58.9 60.7 59.2 5.2 6.6 4.7 General gov't final consumption expenditure 10.5 8.8 6.5 9.1 4.6 0.1 7.1 Gross capital formation 24.1 30.7 22.2 33.6 7.7 -0.6 6.9 Exports of goods and services 34.2 25.3 41.0 23.7 2.7 5.9 7.5 Imports of goods and services 20.2 23.7 30.5 25.7 1.2 5.7 7.9 Gross savings .. .. .. 28.6 Note: Figures in italics are for years other than those specified. .. indicates data are not available. a. Aid data are for 2012. Development Economics, Development Data Group (DECDG). 40 Indonesia Balance of Payments and T rade 2000 2013 Governance indicators, 2000 and 2012 (US$ millions) Total merchandise exports (fob) 65,408 183,548 Total merchandise imports (cif) 44,404 195,139 Voice and accountability Net trade in goods and services 15,243 -5,277 Political stability Current account balance 7,998 -28,448 Regulatory quality as a % of GDP 4.8 -3.3 Rule of law Workers' remittances and compensation of employees (receipts) 1,190 7,212 Control of corruption Reserves, including gold 29,268 99,387 0.0 25. 0 50. 0 75. 0 100.0 2012 Country's percentile rank (0-100) Central Government Finance higher values imply better ratings 2000 (% of GDP) Source: Worldwide Governance Indicators (www.govindicators.org) Current revenue (including grants) 19.7 15.3 Tax revenue 11.1 11.5 Current expenditure 15.6 17.5 T echnology and Infrastructure 2000 2012 Overall surplus/deficit -1.8 -2.2 Paved roads (% of total) 58.0 57.0 Highest marginal tax rate (%) Fixed line and mobile phone Individual 35 30 subscribers (per 100 people) 5 130 Corporate 30 28 High technology exports (% of manufactured exports) 16.4 7.3 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 143,655 265,208 Agricultural land (% of land area) 25 30 Total debt service 16,638 36,577 Forest area (% of land area) 54.9 51.7 Debt relief (HIPC, MDRI) – – Terrestrial protected areas (% of land area) 13.6 14.7 Total debt (% of GDP) 87.1 28.7 Freshwater resources per capita (cu. meters) 9,389 8,281 Total debt service (% of exports) 26.3 17.1 Freshwater withdrawal (% of internal resources) 5.6 5.6 Foreign direct investment (net inflows) -4,550 18,444 CO2 emissions per capita (mt) 1.3 1.8 Portfolio equity (net inflows) -1,021 -1,827 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) 3.6 4.7 Composition of total external debt, 2012 Energy use per capita (kg of oil equivalent) 741 857 IBRD, 10,468 IDA, 2,200IMF, 3,044 Short-term, Other multi- 44,764 lateral, 10,409 W orld Bank Group portfolio 2000 2012 Bilateral, 38,571 (US$ millions) IBRD Total debt outstanding and disbursed 11,715 10,468 Disbursements 1,051 1,199 Principal repayments 761 449 Private, 145,443 Interest payments 950 268 US$ millions IDA Total debt outstanding and disbursed 714 2,200 Disbursements 59 25 Private Sector Development 2000 2012 Total debt service 31 121 Time required to start a business (days) – 48 IFC (fiscal year) Cost to start a business (% of GNI per capita) – 22.7 Total disbursed and outstanding portfolio 880 820 Time required to register property (days) – 22 of which IFC own account 480 546 Disbursements for IFC own account 20 102 Ranked as a major constraint to business 2000 2012 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 43 107 n.a. 48.2 .. n.a. 41.5 .. MIGA Gross exposure 56 627 Stock market capitalization (% of GDP) 16.3 45.7 New guarantees 0 0 Bank capital to asset ratio (%) 6.0 11.9 Note: Figures in italics are for years other than those specified. 5/30/14 .. indicates data are not available. – indicates observation is not applicable. Development Economics, Development Data Group (DECDG). 41 Millennium Development Goals Indonesia With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) Indonesia Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2012 Poverty headcount ratio at $1.25 a day (PPP, % of population) 54.3 43.4 47.7 16.2 Poverty headcount ratio at national poverty line (% of population) .. 17.6 23.4 12.0 Share of income or consumption to the poorest qunitile (%) 9.4 9.0 9.6 7.3 Prevalence of malnutrition (% of children under 5) 31.0 27.4 24.8 18.6 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) 98 95 93 94 Primary completion rate (% of relevant age group) 95 96 95 100 Secondary school enrollment (gross, %) 47 48 56 81 Youth literacy rate (% of people ages 15-24) 96 .. .. 99 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 92 93 98 103 Women employed in the nonagricultural sector (% of nonagricultural employment) 29 29 32 33 Proportion of seats held by women in national parliament (%) 12 11 8 19 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1 ,000) 84 67 52 31 Infant mortality rate (per 1,000 live births) 62 51 41 26 Measles immunization (proportion of one-year olds immunized, %) 58 63 76 80 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 1 00,000 live births) 600 420 340 220 Births attended by skilled health staff (% of total) 41 50 67 82 Contraceptive prevalence (% of women ages 1 5-49) 50 54 55 61 Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 1 5-49) 0.1 0.1 0.1 0.4 Incidence of tuberculosis (per 100,000 people) 206 205 204 185 Tuberculosis case detection rate (%, all forms) 20 9 20 72 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 70 74 78 84 Access to improved sanitation facilities (% of population) 35 41 47 59 Forest area (% of land area) 65.4 60.2 54.9 51.7 Terrestrial protected areas (% of land area) 10.0 10.9 13.6 14.7 CO2 emissions (metric tons per capita) 0.8 1.2 1 .3 1.8 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 3.8 4.1 3.6 4.7 Goal 8: develop a global partnership for development Telephone mainlines (per 1 00 people) 0.6 1.7 3.2 15.4 Mobile phone subscribers (per 1 00 people) 0.0 0.1 1.8 114.2 Internet users (per 100 people) 0.0 0.0 0.9 15.4 Households with a computer (%) .. .. 2.5 15.1 Education indicators (%) Measles immunization (% of 1-year olds) ICT indicators (per 100 people) 125 100 140 100 120 75 100 75 80 50 50 60 25 40 25 0 20 2000 2005 2010 0 0 1990 1995 2000 2012 2000 2005 2010 Primary net e nrollme nt rati o Ratio of girls to boys in primary & secon dary Indonesia East Asia & Pacific Fixed + mobile subscrib ers Interne t users education Note: Figures in italics are for years other than those specified. .. indicates data are not available. 5/30/14 Development Economics, Development Data Group (DECDG). 42 Annex B2: Portfolio Performance and Management As of Date 5/21/2014 Indicator 2011 2012 2013 2014 Portfolio Assessment Number of Projects Under Implementation a 33 31 29 28 b Average Implementation Period (years) 3.7 3.8 3.6 3.5 Percent of Problem Projects by Number a, c 12.1 16.1 17.2 25.0 a, c Percent of Problem Projects by Amount 3.7 7.0 10.6 19.3 a, d Percent of Projects at Risk by Number 12.1 19.4 17.2 25.0 a, d Percent of Projects at Risk by Amount 3.8 8.6 10.6 19.3 Disbursement Ratio (%) e 43.2 38.5 15.5 20.3 Portfolio Management CPPR during the year (yes/no) No Yes Yes No Supervision Resources (total US$ millions) 4.9 5.6 5.8 5.4 Average Supervision (US$ thousands/project) 148 180 200 192 Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 309 27 Proj Eval by OED by Amt (US$ millions) 30,339.1 3,766.7 % of OED Projects Rated U or HU by Number 25.4 25.9 % of OED Projects Rated U or HU by Amt 21.0 18.8 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio,     which includes all  active  projects as well  as projects which exited during the  fiscal  year. 43 Annex B3: Indicative IBRD Lending Program Fiscal Year Project ID US$(M) PRO GROWTH FY13 Indonesia Infrastructure Guarantee Fund Project 30 FY13 First Connectivity Development Policy Loan 100 Institutional, Tax Administration, Social and Investment FY13 (INSTANSI DPL) 300 FY13 Financial sector and Investment climate Reform and Modernization 100 PRO JOBS FY13 Sustainable Management of Agricultural Research and Technologies 80 FY13 Research and Innovation in Science and Technology Project 95 PRO POOR National Community Empowerment Program In Urban Areas For FY13 266 2012-2015 (PNPM Urban IV) National Program for Community Empowerment in Rural Area FY13 2012-2015 (PNPM Rural V) 650 Additional Financing - Third Water Supply and Sanitation for Low FY13 Income Communities Project (PAMSIMAS II) 99.9 Results 1,701 PRO GROWTH FY14 Indonesia Second Power Transmission Development Project 325 FY14 Connectivity Development Policy Loan 2 300 Institutional, Tax Administration, Social and Investment FY14 400 (INSTANSI) DPL-2 PRO GREEN FY14 Coral Reef Rehabilitation and Management Project (COREMAP) 3 47 Results 1,072 Planned Deliverables PRO GROWTH Financial Sector and Investment Climate Reform and Modernization FY15 500 (FIRM) Development Policy Loan 2 Additional Financing Local Government and Decentralization FY15 500 Project (LGDP) Results 1,000 Overall Result 3,773 Under Discussion Road Asset Preservation Program - P4R 200 Solid Waste Management Improvement 100 Water and Sanitation Investment Facility 100 44 Annex B4: Analytical and Advisory Activities TF Support Engagement Product Area FY2013 Economic and Sector Work PPP Framework and Policy  Growth PPIAF Surabaya NRW Management Strategy  Growth PER: Financing Local Governments in ID -- Growth An Agenda for Senior Secondary Education -- Jobs Indonesia Life Long Learning -- Jobs Teacher Reform in Indonesia -- Jobs Technical Assistance Supporting Indonesia Anti-Corruption Institutions  GAC Mainstreaming DRR in Indonesia  Green TF-Aceh Response TA Facility  Green Indonesia Energy Sector Policy Dialogue  Green Geothermal Power Support Program  Green Jakarta Fiscal and Bond Issue  Growth Support for Bureaucracy Reform -- Growth Indonesia's Non-Tariff Measures  Growth Policy Dialogue on Services  Growth MDTF - Indonesia Domestic Trade  Growth Indonesia Viability Gap Financing  Growth Promoting Development Effectiveness: Mediation and Community  Poverty Legal Empowerment Program ID - Health & Conflict Prevention  Poverty Water and Sanitation Financing Program  Poverty Low-income Housing Policy and Finance  Poverty Programmatic2 Corruption Prevention Supports GAC Enhancing Financial Inclusion in Indonesia Alatabani Growth Improving Indonesia's Domestic and International Trade Capacity Growth ID-TF CPDA Implementation Support Poverty Financing Options with Private Sector Participation for Hydr. Growth 2  Sub‐products to be delivered over the course of FY13‐15  45 TF Support Engagement Product Area FY2014 Economic and Sector Work Local Level Institutions III -- Poverty Indonesia: Urban Poverty Analysis, Program Review and PNPM- Poverty Urban Indonesia 2013 Development Policy Review -- Poverty Technical Assistance Support for Developing Gender Engagement in Indonesia  Gender Disaster Risk Financing -- Green ID Climate Policy and Institutional Support Green Energy Efficiency Financing Program -- Green REDD Special Advisory Service -- Green Indonesia Country Program's Disaster and Climate Risk Review  Green Rapid Response Support on Financial Sector Policy  Growth Gas Development Master Plan  Growth Indonesia Port and Road Sector Dialogue -- Growth Radio spectrum management for broadband Internet development  Growth Jakarta Metro Transport Agency Workshop  Growth Support for Strengthening Sub-National PFM  Growth Logistics and Connectivity  Growth Rapid-response Support on Trade Monitoring and Policy  Growth World Bank Support for Bureaucracy Reform Implementation, -- Growth Monitoring and Evaluation at the National Level ID-TF Local Government Capacity Development  Poverty WSP-Advisory Services  Poverty Water Supply Sources and Demand Assessment for Bandar  Poverty Lampung PROFOR: Indonesia - Benefits Sharing and Customary Land Right Poverty Review of PPP Scope for the Water Supply Distribution in  Poverty Lampung 46 TF Support Engagement Product Area FY 20153 Economic and Sector Work Initiative for Fiscal Transparency and Accountability (Inisiatif -- GAC Akuntabilitas dan Transparansi Fiskal) Indonesia Forestry and Non-Forestry Land Policy Stocktaking -- Green Indonesia's Natural Resources, Growth and Sustainable -- Green Development Infrastructure Investment in Indonesia -- Growth Supporting the Strengthening of the Saving and Loan Cooperatives  Growth in Indonesia Improving National Freight Logistics RAS Growth Indonesia Sea Freight and Port Development RAS Growth Sulawesi Development Diagnostics -- Growth Macro-assessment of policy & stocktaking -- Growth Indonesia Economic Quarterly FY14 -- Growth Diagnostic Study of Bond Market Development  Growth Supporting Strengthening of the Saving and Loan Cooperatives -- Growth Indonesia School Grants Program Review -- Jobs Higher Education in Indonesia # Studies on Strategic Challenges Jobs Inequality and Shared Prosperity  Poverty Assessing Supply-Side Readiness -- Poverty Evaluation of ECED services -- Poverty Technical Assistance Benefits Sharing and Customary Land Rights in Forest Areas  Green Schemes for Indonesian Indigenous People Prep of Tech Guidelines for Safe Schools -- Green Indonesia Country Program's Disaster and Climate Risk Review  Green Support for Strengthening Coordination and Operation of Indonesia  Green Disaster Fund and Needs Assessment to Accelerate Mentawai Recovery Natural resources, governance and development - Managing risks, -- Green maximizing opportunities Indonesia Clean Stove Initiative  Green Indonesia Operational Study for River Basin Management -- Green ID Climate Policy and Institutional Support  Green Raising awareness and building consensus -- Green The Indonesia Carbon Capture Storage (CCS) Capacity Building  Green 3  A large number of these activities may be formally delivered in FY16 , i.e. AIS completed  47 TF Support Engagement Product Area Program Green Development Support to GoI -- Green Public Expenditure Analysis and Capacity Harmonization  Growth (PEACH) ID: eServices Development of Secure Government Network  Growth (Internal) Technical Review and Support for Jakarta Flood Management  Growth System Technical assistance support for Lampung PDAM Water  Growth Distribution Improvement Program Support for Non-Tax Revenue Management  Growth Supporting Micro Insurance Development in Indonesia  Growth Renewable Energy Resource Mapping and Geospatial Planning: I  Growth PPP Unit Development in Ministry of Finance  Growth Reforming the Minibuses in Surabaya -- Growth Urban Transport Corridor Development in Surabaya -- Growth Supporting the Implementation of Indonesia National Strategy  Growth Support for Enhanced Macro and Fiscal Policy Analysis  Growth (SEMEFPA) Technical Assistance and Support to Bappenas and Kemenko Kes  Growth Formulation and Implementation of Indonesian Investment Policy  Growth Support for Enhancing Fiscal Transfer -- Growth Sub National Development Diagnostics -- Growth Strengthening Subnational Fiscal Capacity for Infrastructure  Growth TransSumatra Expressway Project Value for Money Study -- Growth Indonesia: Broadband Advisory Support -- Growth Indonesia Crisis Simulation Framework  Growth Advisory and Analytical Activities to Support Public Procure  Growth Supporting Financial Sector Development for Improving Growth Investment Helping Generate Jobs for Pro-Poor Growth  Jobs Support for Social Security Reform  Jobs Design and Financing of SJSN Pension and Old Age Savings Pro -- Jobs Skills for Economic Transformation -- Jobs Higher Education in Indonesia # Introduction and Dissemination of Jobs Information concerning the new Higher Education Law TA on Food Security Policy in Indonesia  Poverty Indonesia - Modernizing Water Management Systems  Poverty Indonesia Beverage Crops Value Chains TA  Poverty Structure Assessment and Development of Operating Procedures  Poverty Legal Setup of Indonesia Water and Sanitation Investment Facility -- Poverty PNPM Mandiri Revolving Loan Fund (RLF) Capacity-Building  Poverty and Sustainability Project 48 TF Support Engagement Product Area Implementation support to National Community Empowerment  Poverty Program in Urban Areas for 2012-2014 Technical Assistance to KPDT  Poverty Poverty Programmatic  Poverty Pamsimas Support Trust Fund  Poverty National Program for Community Empowerment (PNPM) Field  Poverty Operations Strengthening ECED services -- Poverty UNICO -- Poverty Fiscal Space for Universal Coverage -- Poverty Papua HIV IBBS 2nd Round - ID  Poverty ID HIV Economic Analysis -- Poverty PROFOR: Indonesia - Benefits Sharing and Customary Land -- Poverty Rights in Forest Area Schemes for Indonesia Indonesia - Stunting Reduction and PNPM-Generasi TA -- Poverty TA for GOI Community-based Health and Nutrition -- Poverty 49 Annex B6: Key Economic Indicators Actual Estimate Projected Indicator 2010 2011 2012 2013 2014 2015 2016 National accounts (as % of GDP) Gross domestic product4 100 100 100 100 100 100 100 Agriculture 15.3 14.7 14.5 14.4 13.8 13.5 13.1 Industry 47.0 47.1 46.8 45.7 46.0 45.4 44.9 Services 37.7 38.2 38.7 39.9 37.9 38.8 39.6 Total Consumption 66.0 65.7 66.8 68.4 64.1 63.8 63.6 Gross domestic fixed investment 32.0 31.9 32.7 31.7 33.9 33.8 33.9 Government investment 1.2 1.6 2.0 2.1 1.9 1.9 1.9 Private investment 30.8 30.3 30.7 29.6 32.0 31.9 31.9 Exports (GNFS)5 24.6 26.4 24.3 23.7 23.9 23.7 23.6 Imports (GNFS) 22.9 24.9 25.9 25.7 24.2 23.6 23.3 Gross national savings6 31.2 31.4 30.2 28.6 33.6 33.8 34.1 Memorandum items Gross domestic product (US$ million at current prices) 709 846 877 869 836 906 984 GNI per capita (US$, Atlas method) 2,500 2,920 3,450 3,620 3,540 3,550 3,670 Real GDP Growth Gross domestic product at market prices 6.2 6.5 6.3 5.8 5.3 5.5 5.5 Gross Domestic Income 4.1 5.0 3.5 3.4 7.8 5.2 5.0 Real annual per capita growth rates (%) Gross domestic product at market prices 4.8 5.1 4.9 4.6 4.0 4.2 4.4 Total consumption 3.5 2.5 4.6 2.6 2.6 3.6 3.7 Private consumption 4.3 2.6 5.3 2.5 2.9 3.6 3.6 Balance of Payments (US$ billion) Exports (GNFS)b 174.8 221.5 211.6 206.1 199.9 214.7 232.2 Merchandise FOB 158.1 200.8 188.5 183.5 178.1 191.2 206.6 Imports (GNFS)b 153.5 197.3 213.3 211.4 202.4 214.1 229.6 Merchandise FOB 127.4 166.0 179.9 177.4 170.6 181.2 194.8 Resource balance 21.3 24.2 -1.7 -5.3 -2.5 .6 2.5 Net current transfers 4.6 4.2 4.1 4.1 4.9 2.1 2.0 Current account balance 5.1 1.7 -24.4 -28.4 -21.7 -20.8 -19.7 Net private foreign direct investment 11.1 11.5 13.7 14.8 16.7 19.0 21.6 7 Change in reserves -30.3 -11.9 -.2 7.3 7.9 4.7 -6.3 Memorandum items 4 GDP at market prices 5 "GNFS" denotes "goods and nonfactor services." 6 Includes net unrequited transfers excluding official capital grants.  7 Includes use of IMF resources. 50 Actual Estimate Projected Indicator 2010 2011 2012 2013 2014 2015 2016 Resource balance (% of GDP) 3.0 2.9 -0.2 -0.6 -0.3 0.1 0.3 Real annual growth rates (2010=100) Merchandise exports (FOB) 4.6 4.5 -8.9 -0.7 -2.1 7.1 7.7 Merchandise imports (CIF) 18.6 12.5 2.0 1.0 -6.2 5.8 6.5 Public finance (as % of GDP at market prices)8 Revenues 15.5 16.3 16.2 15.3 15.5 -- -- Expenditures 16.2 17.4 18.1 17.5 18.1 -- -- Budget surplus (+) or deficit (-) -0.7 -1.1 -1.9 -2.2 -2.6 -- -- Capital expenditure 1.3 1.6 1.8 1.8 1.9 -- -- Foreign financing -0.1 -0.2 -0.3 -0.2 -0.5 -- -- Monetary indicators M2/GDP 38.3 38.8 40.2 41.0 41.8 42.9 44.1 Growth of M2 (%) 15.4 16.4 15.0 14.7 14.5 14.6 14.6 Price indices, 2010=100 Merchandise export price index 100 122 125 121 122 122 122 Merchandise import price index 100 116 123 110 112 112 114 Merchandise terms of trade index 100 105 102 110 109 109 108 Real exchange rate (US$/LCU)9 100 99 92 96 107 106 104 Real interest rates Consumer price index (% change) 5.1 5.4 4.3 7.0 5.6 6.1 5.9 GDP deflator (% change) 8.3 8.1 4.4 4.4 6.6 5.9 5.6 8 Consolidated central government. 9 "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.  51 Annex B7: Key Exposure Indicators Actual Estimate Projected Indicator 2010 2011 2012 2013 2014 2015 2016 Total debt outstanding and disbursed (TDO) (US$m)a 200,267 224,838 254,899 236,179 215,164 192,035 176,896 10 Net disbursements (US$m) 12,360 17,743 23,559 18,673 21,016 23,129 15,138 a Total debt service (TDS) (US$m) 29,342 31,744 36,641 36,492 34,003 33,226 21,207 Debt and debt service indicators (%) TDO/XGS 11 110.3 98.3 116.5 110.6 101.8 84.5 72.2 TDO/GDP 28.2 26.6 29.1 27.2 25.7 21.2 18.0 TDS/XGS 16.2 13.4 15.5 17.1 16.4 15.1 9.3 Concessional/TDO 22.9 20.3 16.0 16.8 17.8 18.4 18.2 IBRD exposure indicators (%) IBRD DS/public DS 13.4 9.0 6.7 4.4 3.3 5.4 5.9 12 Preferred creditor DS/public DS (%) 26.3 21.9 20.3 19.7 13.7 14.5 17.0 IBRD DS/XGS 0.7 0.4 0.3 0.2 0.2 0.4 0.3 13 IBRD TDO (US$m) 9,054 9,717 10,468 12,571 12,576 12,195 11,766 Share of IBRD portfolio (%) 8.2 9.3 9.9 12.6 12.4 11.6 10.7 d IDA TDO (US$m) 2,313 2,277 2,200 2,168 2,124 2,076 2,021 IFC (US$m) Loans 150 180 222 275 275 275 275 14 Equity and quasi-equity / 7.1 5.0 65.0 25.0 25.0 25.0 25.0 MIGA MIGA guarantees (US$m) 207 627 627 627 627 627 627 10 Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short-term capital 11 "XGS" denotes exports of goods and services, including workers' remittances. 12 12 Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. 13 Includes present value of guarantees. 14 Includes equity and quasi-equity types of both loan and equity instruments. 52 Annex B8.1: Operations Portfolio (IBRD/IDA and Grants) As of Date 4/21/2014 Closed Projects 345 IBRD/IDA* Total Disbursed (Active) 2,064.7 of w hich has been repaid 51.3 Total Disbursed (Closed) 12,317.0 of w hich has been repaid 12,646.6 Total Disbursed (Active + Closed) 14,381.7 of w hich has been repaid 12,698.0 Total Undisbursed (Active) 5,044.3 Total Undisbursed (Closed) 13.4 Total Undisbursed (Active + Closed) 5,057.7 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementation Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives Progress P114348 Water Resources and Irr Mgmt Program 2 MS MU 2011 150.0 129.0 59.0 P127813 COREMAP 3 # # 2014 47.4 47.4 1.1 P130389 Coremap III # # 2014 10.2 P113078 Geothermal Clean Energy Investment Proje MS MS 2015 175.0 175.0 233.0 P085133 Govt Finl Mgt & Revenue Admin Project S S 2005 55.0 5.0 26.8 26.8 26.8 P096921 ID - National UPP (PNPM UPP) MS MS 2008 167.7 125.0 0.7 10.8 -98.4 -12.6 P092218 ID- Indo Infrastructure Finance Facility S S 2009 100.0 8.0 -92.0 P115763 ID-HCFC Phase-out in the PU Foam Sector S MS 2014 2.7 2.3 0.8 P113341 ID-Health Professional Education Quality MU MU 2010 77.8 17.9 17.9 14.5 P111577 ID-Local Government and Decentralization S S 2010 220.0 97.2 91.0 P128832 ID-PNPM RURAL 2012-2015 S MS 2013 650.0 300.2 97.8 P122810 ID-PNPM RURAL IV MS MS 2012 531.2 0.4 -2.5 P121842 ID-Research and Innovation in S&T S MS 2013 95.0 87.7 10.2 P079906 ID-Strategic Roads Infrastructure MS MS 2007 414.5 26.5 10.8 37.3 35.8 P090991 ID-URBAN WATER SUPPLY S MS 2010 23.6 7.0 3.0 P085375 ID-WSSLIC III (PAMSIMAS) S MS 2006 99.9 137.5 75.4 -33.4 P096532 ID: Dam Operational Improvement (DOISP) MS MS 2009 50.0 16.4 16.4 -2.8 P118916 Indonesia Infrastructure Guarantee Fund S S 2013 29.6 29.6 1.7 P117323 Indonesia Power Transmission Development S MS 2011 225.0 176.0 P111034 Jakarta Urgent Flood Mitigation Project MU MU 2012 139.6 129.9 42.4 P125405 National Community Empowerment Program S S 2013 266.0 187.7 P100740 PINTAR U U 2009 110.0 109.7 109.3 P130048 Progr for Econ Resilience, Inv & Soc Ass MS MS 2012 2000.0 2000.0 P118150 Scholarships Program MS MS 2011 112.7 79.5 P123994 Second Power Transmission Development S S 2014 325.0 325.0 9.2 P106384 Strengthening Indonesian Statistics U U 2011 65.0 18.0 47.0 29.2 P117243 Sustainable Management of Ag Research MS MS 2013 80.0 68.7 17.0 P112158 Upper Cisokan Pumped Storage Hydro-Elect MS MU 2011 640.0 636.0 183.5 74.5 P090990 Western Indonesia National Roads Improv. MS MU 2011 250.0 245.0 120.9 Overall Result 7099.9 267.5 12.9 45.3 5046.6 720.7 136.2 53 Annex B8.2: Committed and Disbursed Outstanding Investment Portfolio (IFC) As of 3/31/2014 (In USD Millions) Committed Disbursed Outstanding FY Company **Quasi Partici **Quasi Partici Approval Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 2006/14 Bank Danamon 75 0 0 5 0 75 0 0 0 0 2011 Bank Intl Indo 75 0 0 0 0 0 0 0 0 0 10/12/2008 Bank of Banks 0 8.19 0 0 0 0 7.91 0 0 0 2011 Biocarbon 0 3 0 0 0 0 3 0 0 0 0/09/14 BTPN 128.63 32.39 0 0 0 128.63 32.39 0 0 0 0/13 BUK 4.23 3.29 0 0 0 0 2.96 0 0 0 2012 Cimb Niaga 75 0 0 0 0 75 0 0 0 0 2012 FHP Indonesia I 0 24.88 0 0 0 0 8.28 0 0 0 2007/08 Fugui Indonesia 6.68 0 0 0 0 6.68 0 0 0 0 2009 IIFF 0 39.15 0 0 0 0 34.02 0 0 0 2010 JICT 23.64 0 0 0 17.14 23.64 0 0 0 17.14 0 Keb Hana Indo 29.12 22.22 0 0 0 29.12 20.26 0 0 0 2012 Medco Power 0 25 0 0 0 0 25 0 0 0 2013 Moya Indonesia 0 8.74 0 0 0 0 0 0 0 0 0 Moya Tangerang 20.16 0 0 0 0 0 0 0 0 0 2011 Oto Finance 36.4 0 0 0 0 36.4 0 0 0 0 2013 Protelindo 50 0 0 0 0 50 0 0 0 0 0 Pt Has 13.75 0 0 0 13.75 13.75 0 0 0 13.75 2007/08 Pt Karunia (Kas) 2.45 0 0 0 0 2.45 0 0 0 0 0 Pt Mas 4.75 0 0 0 4.75 4.75 0 0 0 4.75 2008 Pt Prakars (Pas) 3.55 0 0 0 0 3.55 0 0 0 0 2008 Pt Sas 1.23 0 0 0 0 1.23 0 0 0 0 0/08 Pt Tas 14.2 0 0 0 11.75 14.2 0 0 0 11.75 2008/09 Pt Tvs 5.45 0 8.73 0 0 5.45 0 8.73 0 0 2009/11 Pt Viscose 39.17 0 0 0 112.5 39.17 0 0 0 112.5 2008/09 Saratoga Asia Ii 0 11.61 0 0 0 0 1.28 0 0 0 Sayap Mas 2013 Utama 13.75 0 0 0 13.75 13.75 0 0 0 13.75 2010 Trada 30.57 0 0 0 0 30.57 0 0 0 0 0/13 Wintermar 37.09 0 10 0 0 37.09 0 10 0 0 Total Portfolio: 689.82 178.47 18.73 5 173.64 590.43 135.1 18.73 0 173.64 54 95° 100° 105° 110° 115° 120° 125° This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and INDONESIA any other information shown on this map do not imply, on CITIES AND TOWNS the part of The World Bank Group, any judgment on the PROVINCE CAPITALS legal status of any territory, 15° or any endorsement or NATIONAL CAPITAL acceptance of such INDONESIA boundaries. RIVERS MAIN ROADS MYANMAR VIETNAM RAILROADS PHILIPPINES PROVINCE BOUNDARIES 10° 10° INTERNATIONAL BOUNDARIES THAILAND Sulu Sea 135° 140° Banda Aceh L A Y 5° A S BRUNEI 5° 1 Medan M Natuna I Celebes Talaud Is. Pematangsiantar Besar 24 Tarakan Sea PACI F I C OCE AN Tanjung Selor 25 A Simeulue 19 Morotai 2 Manado SINGAPORE Nias Tanjungpinang 23 Ternate Halmahera Pekanbaru 26 0° 3 Pontianak AN TAN K AL IM ANTAN 27 Gorontalo Waigeo 0° Lingga 20 Samarinda Manokwari Me Padang 31 Biak Balikpapan Palu Sorong 4 5 Peleng Obi nt Siberut Jambi Bangka 21 aw Pangkalpinang SULAWESI Misool 33 Yapen Jayapura SUMATERA Palangkaraya Mamuju Sula Is. Ceram ai 9 22 6 Palembang Belitung 28 Amahai Fakfak 29 Is Buru 7 Bandjarmasin 30 Kendari 34 PAPUA . NEW GUINEA Bengkulu Parepare Ambon Timika Puncak Jaya 8 Muna (5030 m) 5° Bandar Java Sea Makassar Kai PAPUA Enggano Lampung 11 Baubau Banda 32 Is. JAKARTA 0 200 400 Kilometers Serang Sea Aru Is. 12Bandung Semarang Madura 10 13 Wetar Surabaya Babar Tanimbar 0 100 200 300 400 Miles JAWA Yogyakarta 16 Sumbawa Alor Moa Is. 15 Bali Lombok Raba Flores 95° 100° 105° 14 Denpasar Merauke Mataram Ende Arafura Sea 18 TIMOR-LESTE PROVINCES: 17 10° Waingapu Sumba Timor 10° 1 NANGGROE ACEH DARUSSALAM 12 JAWA BARAT 23 KALIMANTAN TIMUR Kupang 2 SUMATERA UTARA 13 JAWA TENGAH 24 KALIMANTAN UTARA 3 RIAU 14 D.I. YOGYAKARTA 25 SULAWESI UTARA 4 SUMATERA BARAT 15 JAWA TIMUR 26 GORONTALO 5 JAMBI 16 BALI 27 SULAWESI TENGAH INDIAN OCEAN 6 BENGKULU 17 NUSA TENGGARA BARAT 28 SULAWESI BARAT SUMATERA SELATAN NUSA TENGGARA TIMUR SULAWESI SELATAN IBRD 33420R3 7 18 29 DECEMBER 2012 8 LAMPUNG 19 RIAU KEPULAUAN 30 SULAWESI TENGGARA 15° 15° 9 BANGKA-BELITUNG 20 KALIMANTAN BARAT 31 MALUKU UTARA 10 11 BANTEN D.K.I. JAKARTA 21 22 KALIMANTAN TENGAH KALIMANTAN SELATAN 32 33 MALUKU PAPUA BARAT AUSTRALIA 115° 120° 125° 130° 135° 140° 34 PAPUA