Project Information Document (Pid) s32

PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB3680 Project Name Strengthening the National Statistical System of Indonesia Region EAST ASIA AND PACIFIC Sector Central government administration (100%) Project ID P106384 Borrower(s) INDONESIA Implementing Agency Central Statistics Agency (BPS) Jl. Dr. Sutomo No. 6-8 Indonesia 10710 Tel: +62 21 3841195 Fax: +62 21 3857046 Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared February 25, 2008 Estimated Date of February 24, 2009 Appraisal Authorization Estimated Date of Board June 30, 2009 Approval

1. Key development issues and rationale for Bank involvement Relevant and accurate statistics, that are made available in a timely manner to policy makers and the general public alike, are essential ingredients for formulating informed policies and for monitoring and evaluating their development impacts. The Government of Indonesia has articulated its development objectives in the 2004-2009 Medium-term Development Strategy, including reduced poverty and unemployment, increased economic growth and improved public service delivery. Achieving this plan requires improved feedback, better targeting and more timely information. Demand for increased transparency and accountability at all levels of government has also put official statistics under intense public scrutiny as barometer for measuring social and economic conditions. In addition, foreign investors are keenly interested in monitoring the performance of the economy and the financial sector.

Indonesia is a middle-income country with 220 million people spread across some 6,000 of its more than 17,000 islands. Collecting data in a country of such size and diversity is a great logistic challenge, as well as a costly endeavor. Under the 1997 Statistics Law, the National Statistical System (NSS) is made up of Statistics Indonesia (BPS), which is responsible for collecting basic statistics and coordinating national statistical activities by providing guidance to other agencies to standardize statistical concepts, definitions, classifications and measurement, and other institutions, which generate statistical data for their specific information needs. For instance, the Bank of Indonesia produces balance of payments and monetary statistics, while the Ministry of Finance compiles government finance statistics. Line ministries collect statistical information in their respective sectors as by-products of administration and service delivery. The role of BPS in the NSS is central as it generates a wide variety of social and economic trend statistics, such as National Accounts (growth), prices (inflation), labor (unemployment), income and consumption (poverty), and population (demographic indicators). As statistics users become more sophisticated, they demand higher quality information and are less tolerant of inconsistencies among statistics on the same subject from different sources without satisfactory explanation. Even though BPS generally scores high marks in adhering to international statistical standards, findings of inconsistencies in some statistics have raised questions about the integrity of its data products and business processes.

After the implementation of regional autonomy laws, BPS was one of the few central government institutions to retain its vertical structure down to sub-district level, while regional offices of line ministries were dissolved, significantly reducing their ability to compile sector statistics. As a result, there is high expectation on BPS to provide sub-national data to central decision makers, while local governments also rely heavily on BPS as their statistical capacity has not kept pace with increased data needs. As demands rise for better quality and greater variety of data, BPS is aware of the risks for data quality from overloading the collection and processing operations in the regions, especially as the best trained staff are still concentrated at the center. On the other hand, BPS has not kept up with advances in information and communications technology (ICT) that could ease some of the constraints.

There is a need to conduct appropriate cost-benefit analyses to make strategic choices on matters such as trade-offs between larger sample size and larger budget, or reducing sample sizes of some collections while increasing others. Alternative solutions need to be explored, such as the application of sophisticated modeling to satisfy some demands for small area statistics without increasing sample size. However, there is scarcity of senior expert statisticians to turn to for advice and guidance. Due to lack of such expertise within the institution, BPS is also unable to conduct appropriate statistical analysis and inference. For instance, most statistical estimates are published without standard errors or confidence intervals, and the release of production and consumption data are rarely accompanied by adjustments or allowances for seasonality.

Leadership and staff of BPS are aware of the problems, and BPS has embarked upon a process of organization renewal by undertaking a number of initiatives towards reform to improve their products and services. With support from the World Bank’s Trust Fund for Statistical Capacity Building (TFSCB), BPS prepared the 2005-2009 Strategic Plan for Statistical Development (Renstra) to grow and adapt to the increasing demands and decentralized policy environment. BPS also received assistance from the Bank to review the National Socio-economic Household Survey—one of the most important BPS collections—to improve instruments, methodology and operation. Last year, BPS took steps to strengthen its Statistical Analysis unit to better understand the issues of data consistency and conducted a multi-stakeholder review of its methodology to calculate the poverty line.

The momentum for major reform in BPS is now stronger than ever, based on external demands both within the government and from the public, as well as internal commitments from BPS leadership. Seizing this opportunity, BPS has requested STATCAP support to address the challenges of strengthening its institutional capacity in a comprehensive and sustainable manner. Over the years, BPS has received various donor assistance, but most focused on particular sector, survey or tools. In contrast, STATCAP enables large-scale, institution-wide investments in infrastructure, equipment and training over a medium-term.

To date, intensive discussions with BPS have taken place, with DECDG fielding consultation missions in May and July 2007. A technical assessment mission was completed in November 2007, with external specialists in statistical institution, management and ICT, producing a detailed diagnostics to identify areas and programs of strategic support for STATCAP. Key users of BPS data were also invited to provide their inputs and the proposed project has received strong support from key stakeholders, such as the National Development Planning Agency, Coordinating Ministry for Economic Affairs, Ministry of Finance, as well as the Statistics Community Forum (an independent, multi-stakeholder advisory body to BPS appointed by the State Minister for National Development Planning).

2. Proposed objective(s) The objectives of the project to strengthen the National Statistical System of Indonesia are: i) to improve quality (procedures, standards and methodology, statistical infrastructure) and availability (timeliness, presentation, dissemination) of statistics produced by BPS; ii) to improve the confidence of users in the statistics produced by BPS through promoting engagement with users and enhancing responsiveness to their demands; iii) to improve effectiveness and efficiency of statistical system through better ICT and streamlining of source data collections; and iv) to improve the skills and capacity of BPS staff, especially in the regions.

3. Preliminary description These objectives will be achieved by streamlining and improving standardization of business processes, improving coordination and collaboration among data producers and users, adoption of international standards, improving information management system and accelerating ICT investment, and training of human resources.

Component A: Improvement of Data Collection, Compilation and Dissemination This component will ensure the ongoing relevance and responsiveness of BPS programs to emerging user needs. In light of escalating demands and limited resources, the project will assist with improving priority setting processes around statistical collections and exploring trade-offs between competing needs to ensure the BPS work program is ‘doable’ with existing resources. Such reengineering of business processes will increase integration among survey activities, reduce duplication among data collection mechanisms and articulate the respective roles of BPS and other agencies in addressing data needs through survey activity through a regular review of the overall survey program, including the frequency and content of particular surveys.

Comprehensive methodology review of key data collection activities, along with sound user engagement strategy will improve both the accuracy of statistics, as well as the confidence of users in BPS products. The strengthening of internal analysis unit will allow BPS to better understand the quality of data obtained from its own and other agencies collections and improve data consistency between collections. Transition from 1968 System of National Accounts (SNA) to 1993 SNA will also improve the internal consistency and international comparability. Changes required as a result of user consultations, methodology reviews, internal analysis findings and SNA93 implementation will feed into business process reengineering. A change management component will be included to ensure continued support for the organizational reforms from BPS staff and stakeholders.

Component B: Investments in ICT and Information Management System This component will support the upgrade of information management system and ICT infrastructure to improve standardization, accuracy and timeliness of BPS products. An integrated data warehouse will be designed to facilitate internal data collection, processing and analysis, as well as dissemination and user accessibility. Currently, data management is decentralized across subject-matter units, so the implementation will require careful coordination with the business process reengineering component to ensure the warehouse architecture reflects the new business environment, rather than the existing “stovepipe” structure.

The project will also support the introduction of GIS and GPS technologies to integrate geographically oriented statistical information systems, and to improve efficiency and accuracy of data collection activities in the field. To address the constraints on communications and data transfer, connectivity between central and regional offices will be improved through adoption of VPN and other customized solutions.

In addition, a “model” field office concept will be introduced to design and pilot a “future” statistical office in several regions.

Component C: Human Capacity Development Increasing and changing demands on BPS require: (i) broad-based improvement of technical skills and capacities of BPS staff, and (ii) development of a cadre of senior statisticians with advanced expertise. The first sub-component will identify gaps between existing skills and needs to develop a corporate training strategy, as well as individual training plans. The training strategy will also reflect emerging needs from reengineering of business processes and application of new ICT systems. The second sub-component will focus on redesigning the curriculum at the Statistical Institute (STIS) to better prepare the best graduates for continuing onto advanced education, and a competitive program of graduate fellowships to build an advisory group of statistical experts within BPS. Adjustments in HR policy, such as remuneration and working environment, also need to be explored to accommodate such a group within the BPS structure.

Component D: Project Management and Administration Support The Project Implementation Unit (PIU) will be established in BPS and will be supported by specialist consultants to assist with procurement and contract management, as well as a firm to provide IVV services. For monitoring and evaluation purposes, this component will also finance annual assessments by external consultancy services.

4. Safeguard policies that might apply Environmental Assessment (OP/BP 4.01) No adverse environmental impacts are expected since the proposed project will not be financing any constructions/civil works. However, it will provide equipment and telecommunications access (local office network, BPS intranet VPN, and Internet) to technically enable organizational connectivity (email, administrative information sharing, virtual work assignment, help desk and related technical assistance), and application system and database access (VPN access to BPS Headquarters resources including servers, applications, databases). The ‘software’ part of the project will be the major focus of the proposed project, and to accommodate and support this development, the proposed project will also provide the ‘hardware’ (PC and monitors). The provision of the hardware will be limited in quantity.

The proposed project is not expected to generate significant amounts of hazardous materials, however, operations and maintenance of the ‘hardware’ activities may result in generating electronic wastes (e.g. printed circuit boards from computer, other electronic equipment). In order to mitigate environmental issues, the project will develop a simple and practical guideline on disposal of computer equipment and peripherals which will be then integrated into the project manual.

5. Tentative financing

Source: ($m.) Borrower 8.64 International Bank for Reconstruction and Development 45 Total 53.64

6. Contact point Contact: Vivi Alatas Title: Senior Economist Tel: 5781+3051 / 62-21-5299-3051 Fax: Email: [email protected] Location: Jakarta, Indonesia (IBRD)