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Bureaucratic Reform in The Ministry of Finance

Jakarta, 14-16 November 2007

Presented by Minister of Finance at ¡ Regional Forum on Reinventing Government in Asia¡

Outline of Presentation

Objective of the Reform; Scope of the Reform; Organization; Business Process; HR Management; Implementation; Case Examples; Performance Evaluation;

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Objective of Bureaucratic Reform of the Ministry of Finance

¡ The objective of Bureaucratic Reform is to create state apparatus that is clean, professional and responsible as well as to create an efficient and effective bureaucracy, hence being able to provide excellent public services.¡

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Significant Media Attention on this initiative

¡ The reform that is being implemented by the Ministry of Finance constitutes a breakthrough in the matter of will and courage to carry out an initiative¡ (Kompas Daily Editorial 12 July 2007)

¡ Bureaucratic reform has successfully been set up within the Ministry of Finance and has commenced its implementation on last July 1st and this constitutes a reform that can be set as an example and reference¡ (Media Indonesia Daily Editorial 12 July 2007)

¡ The total reform program within the bureaucratic environment of the Ministry of Finance brings up expectations on efforts towards elimination of decades of deeply rooted corruption¡(Opinion in Tempo Magazine Edition 20 ? 26 August 2007)

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Scope of Bureaucratic Reform of Ministry of Finance

Improvement in Performance

Good Governance

Public Services

Organization

HR

Management

Business Process

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1. Emphasis on functions

2. Utilization of Information Technology and Communications

3. Orientation towards stake holders

4. Establishment of internal compliance units

5. Development of complaint center

Organization

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Business Process

Standard Operating Procedures: Simple Transparent Efficient and cost effective Contains promises of services: terms, costs

and time Accountable

Utilization of Information Technology and Communications Built in Control System Automatic and Integrated Reporting Syste

m Moving towards Paperless Administration

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Reduced direct contact with client

Application of risk management

Monitoring performance through key

performance indicators

Business Process -2

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HR Management

Based on competence

? Assessment Center

? Recruitment

? Placement in positions

? Training

Application of Code of conduct and a Code of Con

duct-Board

Organization of Career pattern (rotation and

promotion)

Application of Individual key performance indicat

ors9

Implementation of Bureaucratic Reform

A. Organization Aspects

DJP (Directorate General of Taxes)

? Large Tax Payer Office : 3 Offices

? Medium Tax Payer Office : 28 Offices

? Small Tax Payer Office : 91 Offices

DJBC (Directorate General of Customs/Excises)

? Custom and Excise Service Office (KPU BC) in T

anjung Priok

DJPb (Directorate General of Treasury):

? Treasury Office in Special Region Banda Aceh

? Pilot Project of Modern Treasury Offices : 18

Offices10

Implementation of Bureaucratic Reform -2

B. Aspects of Business Process

35 excellent services containing:

Transparency in procedures

Clarity of requirements

Certainty of costs and time of

services

Types of excellent services in Direct

orate General

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Implementation of Bureaucratic Reform - 3

C. Aspects of HR Management

Recruitment to be based on competence through the Assess

ment Center

? DJP (Modern Tax Offices) : out of 32,000 employees, 14,000

were recruited.

? DJBC (Custom & Excise Servce Offices): out of 11,000 employees,

1,788 were recruited and 852 have been placed in KPU Tanjung

Priok and 281 in KPU Batam

? DJPb (Treasury Offices Special and Pilots), out of 12,000

employees, 703 were recruited and 610 have been placed in Mode

rn Treasury Office

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CASE EXAMPLES

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TAXATION

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Account Representatives

Information Services

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Tax Payer Registration Number

1 working day

3 Working Days

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VAT Number(Taxable Business)

7 Working Days

3 Working Days

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Tax Refund

2 - 12 Months

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The Tax Refund Payment

1 Month 3 Weeks

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Tax Appeals

12 Months 9 Months

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Excemption for Income Tax on Import

1 Month 3 Weeks

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Excemption of Income Tax on Import for Each Transaction

1 Month5 Working Days

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Reduction of Property Tax

3 Months

2 Months

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Customs and Excises

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Quality of Performance on Services

Internal Compliance Unit

Client Coordinator

AssistanceConsultation

Information Services

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Customs Priority Channel

16 Minutes - 3 Hours 56 Minutes

20 MinutesIf Without Physical Inspection

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Customs Green Channel

4 Hours 30 Minutes

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Customs Red Channel

48 Hours

12 Hours 30 Minutes28

Export Customs Services

9 Hours 7 Minutes

Without Physical Inspecton: 1 HourStandard Physical Inspection : 3 Hours

Non-Standard Physical Inspection : 4 Hours

1 - 4 Work Hours

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Refund of Customs Duties

Maximum 30 Working Days

No clarification yet

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Rush Handling

120 Minutes

No Clarification Yet

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Express Courier Services

1 Working Day

No Clarification Yet

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TREASURY

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Approval of Allotment Document(Issuance of Headquarter of The Ministries/Agencies

DIPA)

End of March

20 DaysFrom Receipt of Presidential Regulation on Details

of State Budget 34

Issuance of Disbursement Order (SP2D) by Modern Treasury Office

1 Day

1 Hour35

Performance Evaluation

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Performanceof Modern Tax Office(Directorate General of Taxes)

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Survey on Tax Payer Satisfaction by AC Nielsen

Office EQ Index

Large Tax Payer OfficeRegional Large Tax Payer Offices

81

Medium Tax Payer Office :Medium Tax Payer Office in Central Jakarta and Medium Tax Payer Office inBatam

78

Small Tax Payer Office :15 Small Tax Payer Officesat Regional Office of Tax Directorate General in Jakarta Pusat

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The Survey on satisfaction for

Special Regional Office was

conducted in 2006 by AC Nielsen

by using the qualitative method

also with very satisfied results

NormsIndonesia 75 Australia overall and pub sector 66 / 74Hong Kong overall and pub sector 75 / 71India overall and pub sector 78 / 78Singapore overall and pub sector 76 / 76

NormsIndonesia 75 Australia overall and pub sector 66 / 74Hong Kong overall and pub sector 75 / 71India overall and pub sector 78 / 78Singapore overall and pub sector 76 / 76 38

The Results of the Survey by Transparency International Indonesia

(Global Corruption Barometer of Indonesia)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5Tahun 2005 Tahun 2006

Tahun 2005 4 .0 3 .8 4 .0 4.2 3 .5 3.0 3 .8 2 .9 3.0 2 .7 3.0 2 .4 2 .4 2.1

Tahun 2006 4 .2 4 .2 4 .2 4 .1 3 .6 3.6 3 .4 3 .3 3.3 3 .0 2.9 2 .9 2 .8 2 .3

Leg islat if Peradilan Po lisi Parpo l Perizinan Dunia Usaha Pajak M ilit er/TNI Pend id ikan Kesehatan PU Ornop /LSM M edia Keagamaan

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Performance of Custom Service Offices

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Performance of Tanjung Priok Custom Services Offices

Growth in revenue;

Improvement in services;

Action taken against misconduct;

Action taken against customs violations.

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IMPROVEMENT IN SERVICES

1. IMPROVEMENT OF CHANNELING SYSTEM BY REDUCTION OF RED

CHANNELS BY +15%, THROUGH:

a. INCREASE IN TOTAL NUMBER OF PRIORITY CHANNEL IMPORTERS;

b. ESTABLISHMENT OF IMPORTERS AS MAIN PARTNERS;

c. ESTABLISHMENT OF YELLOW CHANNEL

2. SIMPLIFICATION OF IMPORT SERVICES PROCEDURES:

a. BUSINESS PROCESS OF CUSTOMS IN IMPORT;

b. PROCEDURES FOR PHYSICAL INSPECTION OF GOODS.

3. IMPROVEMENT IN INFRASTRUCTURE AND FACILITIES IN CUSTOMS

AREAS & TEMPORARY STORAGE.

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Directorate General of Treasury

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Performance of Modern Treasury Office

Shorter time of services

Improvement in employees¡ integrity

Improvement in compliance of service users

National Award on Prime Services

International Award from Asia Development

Bank (ADB) for Service Excellent .

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Thank You