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Indonesia: State-Owned Enterprise Governance and Privatization Program

| country: Indonesia

The project completion report (PCR) noted that broadly based reforms, such as those pursued by the Financial Governance Reforms: Sector Development Program, require long-term institutional development, which can barely be accommodated even in a three-tranche program loan. It suggested that a program cluster approach would have been more useful in this regard, as it combines a long-term approach that permits covering a wide range of policy and institutional reforms with flexibility to adjust to changing circumstances. It also permits proceeding with the gradual introduction of critical components such as corporate governance and the optimal treatment of private sector obligations (PSOs). The cluster modality is also a useful instrument for establishing benchmarks and unifying policy makers who advocate reforms. A move from a program cluster approach with several tranches each to a medium-term framework based on a series of single- tranche programs within a program cluster could be recommended to provide more flexibility while focusing on achievable, upfront outcomes. With such an approach, ADB could also support genuine commitment by relevant stakeholders over a longer period of time.

The Independent Evaluation Department (IED) agrees that a longer-term focus and approach is necessary for such fundamental (and time-consuming) reforms with significant institutional and political implications. What is most needed is consistency within country programming to ensure that initiatives like this Program, once started, are carried through.

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