The World Bank Group in Indonesia Investing in Institutions for Inclusive, Sustainable and Competitive Indonesia - PowerPoint PPT Presentation

1 / 37
About This Presentation
Title:

The World Bank Group in Indonesia Investing in Institutions for Inclusive, Sustainable and Competitive Indonesia

Description:

Title: Reducing Poverty: A Challenge Author: wb266484 Last modified by: wb21345 Created Date: 6/29/2004 2:49:52 AM Document presentation format: On-screen Show – PowerPoint PPT presentation

Number of Views:259
Avg rating:3.0/5.0
Slides: 38
Provided by: wb2675
Category:

less

Transcript and Presenter's Notes

Title: The World Bank Group in Indonesia Investing in Institutions for Inclusive, Sustainable and Competitive Indonesia


1
The World Bank Group in IndonesiaInvesting in
Institutions for Inclusive, Sustainable and
Competitive Indonesia
  • Shubham Chaudhuri
  • World Bank, Indonesia

Jakarta, June 4, 2008
2
Outline
  • Indonesia 2008 Doing Well, But Could Do Even
    Better
  • Indonesia 2012 and Beyond The Development Agenda
  • World Bank Country Partnership Strategy
    Investing in Institutions for Inclusive,
    Sustainable and Competitive Indonesia

3
Indonesia 2008 Doing Well, But Can Do Better
4
Indonesia Doing Well - An Emerging Dynamic
Middle Income Country
  • Major Political transformation over the last 10
    years
  • Democratization
  • Big Bang Decentralization
  • Historic Aceh peace agreement (2005) is largely
    sustaining
  • Commitment to good governance
  • Growing sense of confidence
  • Macroeconomic policies and related reforms have
    been conducted well
  • Growth and macroeconomic performance have been
    increasingly strong
  • Prudent Fiscal Management
  • The financial sector is on a much stronger
    footing and Indonesia is now accessing
    alternative sources of finance
  • Investment is still low but rising fast

5
Robust Growth
  • In 2005, per-capita real GDP for the first time
    exceeded the high that had been reached in 1997,
    before the peak of the crisis
  • and, in 2007, growth accelerated to a ten-year
    high of 6.3, despite a slowing global economy

6
Prudent Macroeconomic Management
  • Lower budget deficits, a much lower debt-to-GDP
    ratio, and manageable inflation (though rising
    recently)

7
.but Slower Progress on Other Dimensions.
8
Stability And Growth Are Delivering Less Poverty
Reduction
  • The poverty rate has been declining, but many are
    near poor and remain sensitive to shocks
    (including recent increase in soy price, palm
    oil, rice)

9
Delivering Fewer Jobs as the Demography Shifts
the Labor Force Rapidly
  • Unemployment fell slightly in 2007, but remains
    high with increasing high school and university
    graduates coming into the labor force

Changes in Labor Force (,000) Changes in Labor Force (,000) Changes in Labor Force (,000)
2002-04 2004-06
Youth (15-24)
HS gt 751 921
lt HS -212 123
Adults
HS gt 1,477 2,529
lt HS 1,178 -1,1158
Total
HS gt 2,229 3,451
lt HS 966 -1,035
10
Education Remains A Challenge
  • Access While Indonesia has achieved nearly
    universal primary education at 93.5, junior
    secondary net enrollment is still low at only
    65.2 and for the poorest quintile it is at only
    50
  • Quality The 2003 PISA math exam results indicate
    that Indonesia scores low and lags behind in
    student learning

11
Transitions To Secondary Tertiary Education
Are Lagging..
12
Under-performing On Some Critical Health Outcomes
13
Environmental Degradation and Unsustainable
Depletion Of Resources
  • two-thirds of Indonesians live in rural areas and
    are directly or indirectly dependent on common
    land, coastal, and environmental resources that
    are being rapidly depleted
  • the other third is affected by environmental
    conditions in urban areas, from water and air
    pollution, congestion and noise
  • deforestation rates in Indonesia are amongst the
    highest in the world and Indonesia is arguably
    the third largest source of greenhouse gas
    emissions, behind only the U.S. and China
  • health and other costs attributable to water
    pollution and limited access to safe water and
    sanitation have been estimated to be roughly 2
    percent of GDP annually
  • annual costs of air pollution to the Indonesia
    economy have been calculated at around 400
    million per year

14
.and There Are Emerging Risks.
15
Risks from Turmoil in Global Financial Market..
  • turmoil in global financial markets is raising
    the costs of meeting Indonesias financing needs,
    despite its strong fundamentals

16
  • Risks from Continued Increases In Fuel Food
    Prices

17
Indonesia 2012 and Beyond The Development Agenda
18
Indonesia 2012 and Beyond The Development
Agenda
  • Governments development agenda is articulated in
    the medium-term strategy (RPJM) for 2004-2009,
    which specifies three broad and multi-faceted
    goals
  • A safe and peaceful Indonesia
  • A just and democratic Indonesia
  • A prosperous Indonesia
  • The process of drafting the 2010-2014 RPJM has
    begun and early indications show that the
    unfinished agenda of the current plan will frame
    the broad priorities of the next one
  • However, the upcoming 2009 presidential and
    legislative elections necessarily make any
    statements about the next governments
    development agenda somewhat speculative

19
Indonesia 2012 and Beyond The Development
Agenda (contd)
  • ACCELERATING growth by making Indonesia more
    COMPETITIVE
  • Building a more INCLUSIVE Indonesia by making
    growth more BROAD-BASED, improving service
    delivery, and enhancing voice
  • Working towards a GREENER Indonesia by making
    growth more SUSTAINABLE through better management
    of natural resources and the environment
  • Making Indonesia more RESILIENT by better
    planning for and management of risks

20
Accelerating growth The Potential
  • Indonesia has the potential to achieve the rates
    of growth it achieved prior to the crisis
  • ..by making the most of Indonesias resource
    endowments while developing globally competitive
    clusters elsewhere
  • by relieving infrastructure bottlenecks and
    remedying weaknesses inconsistencies, and
    reducing uncertainty in the regulatory and
    policy environment

21
Making growth Inclusive The challenges
  • Raising the returns to the main asset of the
    poorlabor
  • by revitalizing agriculture and the rural
    economy
  • and facilitating the transfer of labor from
    low-productivity activities in agriculture to
    higher value-added activities elsewhere
  • Poor quality and limited access remain areas of
    concern for basic education, healthcare, water
    and sanitation services
  • Improving the allocation and efficiency of
    expenditures is the main challenge

22
Raising the returns to the main asset of the
poortheir labor
  • Per-worker productivity in Indonesia is low,
    regardless of sector and not increasing very
    rapidly

23
Facilitating the transfer of workers out of
low-productivity agriculture
  • while the movement of workers out of
    agriculture, the lowest productivity sector, has
    stalled in Indonesia since the crisis

24
Making Growth InclusiveProviding Quality
Education For All
  • Remarkable progress in primary and secondary
    enrollment rates but challenged in improving
    quality and increasing access across the country
  • Uneven spatial distribution and quality of
    teachers (through remedial efforts in place)
  • Positive outcome from the BOS system of direct
    transfers to schools
  • Recently introduced CCT program is aiming to
    improve education access for the poor
  • Overall progress is hindered, however, by the
    unfinished decentralization agenda, which has
    left responsibility and accountability for many
    education areas vague

25
Making Growth InclusiveRestructuring the Health
System
  • Transformation to a more sophisticated health
    system in the medium term needed
  • The immediate challenge is to improve quality,
    increase access for the poor and reduce spatial
    disparities
  • Accountability of health care workers is hindered
    by civil service and decentralization
    regulations, which limit the authority local
    governments to manage their staff
  • Inefficiencies and poor quality in the health
    sector have resulted in low utilization rates of
    both public and private facilities, and high
    rates of self-treatment, and is a major source of
    inequity in healthcare access
  • Public health spending for secondary care tends
    to be regressive, although the Askeskin program
    of subsidized healthcare for the poor is
    attempting to change this

26
Financing Is Not The Only or Even The Main
Challenge
  • Improving the allocation and efficiency of
    expenditures and providing adequate services in
    the context of decentralized Indonesia is

27
Ensuring Growth Is Sustainable The Challenges
  • Working towards a GREENER Indonesia by making
    growth more SUSTAINABLE through better management
    of natural resources, and the environment
  • Managing Indonesias forestry and marine
    resources sustainably while providing adequate
    livelihoods
  • Meeting Indonesias energy needs without
    sacrificing its environment
  • Making Indonesias rapidly growing towns and
    cities livable

28
Building Resiliency The challenges
  • Making Indonesia more RESILIENT by better
    planning for and management of risks
  • Preparing for climate change
  • Strengthening institutions and capacity for
    planning for managing disasters
  • Designing social protection schemes that buffer
    the population from the adverse impacts of shocks
  • Enhancing the capacity of and coordination
    mechanisms among financial sector regulatory and
    supervision institutions to deal with systemic
    shocks from either external or internal sources

29
Why It Will Take Time And Commitment
  • Because of the dramatically changed circumstances
    Indonesia finds itself in, and its own ongoing
    and as yet incomplete transition, there is no one
    single policy that could quickly help Indonesia
    to complete its transition to modern economy
  • Democratization and decentralization have
    fundamentally changed decision-making processes
    and accountability structures within government
    and the broader public sphere
  • The tasks facing the government have themselves
    become more difficult, in part because of
    Indonesias own past successes The Middle Income
    Transition
  • The changed global economic environment implies a
    different, though equally important, role for the
    state than in the past
  • These changes reveal weaknesses in the processes
    and capacity for formulating and implementing
    policy and have made the process of implementing
    reforms a more challenging and time-consuming task

30
Strengthening Public Institutions And Processes
  • Restructuring and strengthening the core
    processes, human resources and institutions for
    formulating and implementing policy
  • Reform of public sector systems procurement,
    financial management and budget execution,
    project design, audit, ME
  • Clarify institutional responsibility for civil
    service reform, improve incentives and governance
    and revise the legal framework
  • Making the most out of decentralization
  • Improve the framework (and its implementation)
    for the division of responsibilities between
    national and local governments
  • Improve local government capacity and
    accountability
  • Sustaining the focus on Governance
  • Build on the new institutions created (KPK,
    Judicial and Police Commissions, etc.) that have
    begun to deliver tangible results
  • Raise the focus on the deeper structural reforms
    needed in the Judicial and Legal system
  • Replicate existing success stories at the local
    and national level (MoF, LG reformers, etc)

31
The World BankInvesting in Institutions for an
Inclusive, Sustainable and Competitive Indonesia
32
Changing Role of International Development
Partners in a Middle Income Country (MIC)
  • New partnership model required with Indonesias
    exit from IDA and the post-CGI environment as a
    MIC
  • We are moving to adjust our paradigm
  • From Aid Agency to Development Bank
  • From WB projects to GOI programs
  • From trying to solve Indonesias problems to
    helping Indonesia find and implement the
    solutions
  • From managing transactions to managing
    relationships

33
Strengthening and Using Country Systems
  • World Bank financing represent a small portion of
    Government budget focus on leveraging impact
    through strengthening institutions
  • Public institutions grow by delivering services
    and policies effectively and thus gaining trust
    of the citizens
  • The World Bank works in support of institutions
    that have effective leadership and are able to
    improve performance
  • WBs aim is not to fill in Indonesias
    development challenges, rather to support
    Indonesian institutions that would fill this
    challenge

34
The World Bank new Country Partnership Strategy
Investing in Institutions for an Inclusive,
Sustainable, and Competitive Indonesia
  • Aim
  • The World Bank helps accelerate transition to
    modern governance through investing in Indonesian
    institutions help create replicable success
    stories at national government, local government,
    and public sector levels
  • Approach
  • Building supply of better governance - Investing
    in country systems (supply side)
  • Stimulating demand for better governance
    building on CDD approaches

35
Indonesia CPS Direction for Future Program
36
Outline
  • Indonesia 2008 Doing Well, But Could Do Even
    Better
  • Indonesia 2012 and Beyond The Development Agenda
  • World Bank Country Partnership Strategy
    Investing in Institutions for Inclusive,
    Sustainable and Competitive Indonesia

37
Thank You!
Write a Comment
User Comments (0)
About PowerShow.com