Indonesia: Fiscal Aspect of Social Security Reform

Sovereign Project | 45110-001

Summary

The capacity development TA will help the government in establishing the two main social security administering bodies (BPJS). It will seek to ensure that they will be able to carry out their core functions: (i) collecting member contributions, (ii) paying benefits for health and pension in a timely manner, (iii) managing their assets in a proper and effective manner, (iv) keeping records through an efficient system to support their daily operations, and (v) implementing and abiding by a reliable system of governance. The TA will also help them incorporate the lessons of the social services experiences of other countries in Indonesia's systems.

Latest Project Documents

Title Document Date
Fiscal Aspect of Social Security Reform Oct 2012

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Project Name Fiscal Aspect of Social Security Reform
Project Number 45110-001
Country Indonesia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8202-INO: Fiscal Aspect of Social Security Reform
Japan Fund for Poverty Reduction US$ 800,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Finance - Finance sector development
Public sector management - Social protection initiatives
Gender Equity and Mainstreaming
Description

The capacity development TA will help the government in establishing the two main social security administering bodies (BPJS). It will seek to ensure that they will be able to carry out their core functions: (i) collecting member contributions, (ii) paying benefits for health and pension in a timely manner, (iii) managing their assets in a proper and effective manner, (iv) keeping records through an efficient system to support their daily operations, and (v) implementing and abiding by a reliable system of governance. The TA will also help them incorporate the lessons of the social services experiences of other countries in Indonesia's systems.

The impact of the TA will be to assist the government in increasing the number of participants of the social security administering bodies. The outcomes will be successful establishment and proper functioning of the social security administering bodies. The TA will support the transformation of the current social security operators into two social security administering bodies on health and pension. The TA will help the Government in assessing the financial viability of the new bodies, prepare actuarial projections, and make recommendations to improve its scope of coverage and fiscal sustainability. The TA will also recommend new business processes and procedures for the new social security administering bodies. This will include recommendations on a new system for collection and payments, and capacity building for policy formulation and implementation.

Output 1: Administration plan to implement social security programs in the social security administering bodies is rolled out.

Output 2: Analytical works on participatory and financial management on universal health program are produced.

Output 3: Good governance framework for asset liability management of the social security administration bodies is established.

Output 4: Long-term fiscal risk analysis on the implementation of SJSN programs is established.

Project Rationale and Linkage to Country/Regional Strategy

Provide a brief background on sector performance, problems, and opportunities. Describe link to country/regional strategy and sector road map. Such information should clearly state what problems or gaps a proposed project intends to address within the country/sector context.

The Government of Indonesia (the Government) has identified social security reform as one of their goals to achieve inclusive growth under its second medium-term growth strategy for 2010-2014. Their aim is to expand coverage and quality of the existing social security for all Indonesian citizens, regardless of their income status. The government has initiated the reform process with passing of the Law No. 40 on National Social Security System in 2004 (SJSN Law) and the Law No. 24 on Social Security Administering Bodies in 2011 (BPJS Law).

Lessons from other countries show that social security reform is a long-term process requiring focus and an appropriate sequencing of steps. It must be credible, scalable, and acceptable to diverse stakeholders. It demands good organization and sound design to be effective but even the best designed program will fail if the government fails to make sure that the right business processes, administrative systems, information technology systems, supervision, and enforcement are in place before the system goes into operation. It is crucial that the government addresses all aspects of the system's reform efficiently, including the contribution and benefit structure.

Since 2002, the Asian Development Bank (ADB) has supported social security reform in Indonesia through technical assistance (TA) and program support. The TA was listed in the nonlending products and services of the country operations business plan for 2011-2013. ADB support in reforming the social security system in Indonesia is aligned with ADB's social protection strategy that aims to reduce poverty and people vulnerability to any sudden economic shocks. The Government also views the social security reform as a part of their National Poverty Reduction Agenda. To maintain the momentum and ensure effectiveness of the reform, the Government has requested the Asian Development Bank (ADB) for capacity development technical assistance (TA) to support implementation of the two social security administering bodies.

Impact Increased number of participants of the social security administering bodies
Project Outcome
Description of Outcome Establishment and functioning of the social security administering bodies
Progress Toward Outcome This TA has been supporting the EA/IA by engaging a number of consultants, among others, to assist the FPO and the DSPW in: i) assessing fiscal aspects of the SJSN, ii) developing fiscal risk monitoring, and iii) developing the monitoring and evaluation of the implementation of the National Health Insurance (NHI) and the National Pension Funds (NPF) programs under BPJS scheme.
Implementation Progress
Description of Project Outputs

1. Establish/update white paper of concept notes on social security reform related to its fiscal impact for short, medium and long-terms plan

2. Analytical works on participatory of the local governments and financial management on universal health program are produced.

3. Good governance framework for asset liability management of the social security administration bodies is established.

4. Long-term fiscal risk analysis on the implementation of Sistem Jaminan Sosial Nasional (SJSN) programs is conducted.

Status of Implementation Progress (Outputs, Activities, and Issues)

A financial sustainability analysis, as part of a comprehensive monitoring and evaluation system for the National Health Insurance is developed. The purpose and objectives of a Monitoring system is to enhance the capacity of managing risks by providing an independent and credible measure of the risks involved in the development and operation of NHI and NPF.

ADB in collaboration with UN-DESA assisted the Government of Indonesia in conducting an International Workshop and Conference on Avoiding the Middle Income Trap: Lessons Learnt and Strategies for Indonesia to Grow Equitably and Sustainably that will be held in Bali on 11-13 December 2013.

A (Initial) National Workshop on the National Health Insurance Monitoring and Evaluation was held in 27-29 March 2014, involving all stakeholders, including professional associations, academician and private sectors.

The TA assisting the Bappenas, in collaboration with MOF, OJK, MOH, DJSN, and BPJS Kesehatan, and other stakeholders in developing the Grand Design of NHI Monitoring and Evaluation system. A survey on payment sustainability will be carried out in the Q2 2015 to assess the willingness and behavior of voluntary members of BPJS Kesehatan.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation Directorate of Poverty Reducation and Social Welfare of Bappenas was proposed as Implementing Agency of this TA, which the memo has approved in 2013. Both the EA and the IA provided their inputs prior to implementation of any activities, to ensure alignment with government agenda and needs. Additionally, the EA, the IA, and other stakeholders are able to raised their concern on urgent issues to be addressed, so that Project activities may facilitate and accommodate the dynamic reforms of both social security programs (the National Health Insurance and the National Pension Funds). The EA requested for one-year extension of TA closing date to 2 September 2015 and the memo has been approved by IRM CD on 22 July 2014.
Business Opportunities
Consulting Services

The following consultancy services will be needed:

International

1. Social Security and Financing Expert - Team Leader (12 person-months, intermittent)

2. Social Security Identification System Design/Administration Expert (5 person-months)

National

1. Health Policy Expert (9 person-months)

2. Actuary (6 person-months)

3. Health Economist, specialist in health insurance (6 person-months)

4. Organization Development National Expert (6 person-months)

Procurement Equipment will be procured under this TA.
Responsible ADB Officer Rabin Hattari
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
Ministry of FinanceFrans Seda Building
Jln. Dr. Wahidin Raya No. 1
Jakarata 10710, Indonesia
Timetable
Concept Clearance 30 Aug 2011
Fact Finding 08 Aug 2011 to 12 Aug 2011
MRM -
Approval 11 Oct 2012
Last Review Mission -
Last PDS Update 31 Mar 2015

TA 8202-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
11 Oct 2012 21 Feb 2013 21 Feb 2013 02 Sep 2014 02 Sep 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 800,000.00 0.00 0.00 0.00 0.00 800,000.00 11 Oct 2012 523,851.01
Title Document Type Document Date
Fiscal Aspect of Social Security Reform Technical Assistance Reports Oct 2012

Safeguard Documents

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Evaluation Documents

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