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|  | IEG’s Country Impact Review (CIR) evaluates IFC’s strategies and operations, and their outcome drivers in Indonesia, during fiscal year (FY) 1990-2006. The CIR’s main messages are: 1) while IFC's strategic priorities in Indonesia have been aligned with the country's private sector development needs, it has made little progress in supporting a larger private sector role in infrastructure and in helping deepen the financial markets. Increased private sector participation and IFC support for infrastructure development and for deepening the financial markets will depend on further government reforms. |
The CIR calls for a stronger IFC role in infrastructure and capital market development, including by strategically and operationally partnering with the World Bank and other multilateral development banks to help dovetail sector reforms and investments. 2) IFC needs to strengthen the environmental supervision of its Indonesian projects. The current compliance rate on environmental aspects is significantly below the institutional average and should be improved.
Methodology
The objective of this evaluation is to answer four key evaluative questions about IFC’s strategies and operations in Indonesia during the review period: 1) How effective were IFC’s approaches or strategies for its operations in Indonesia before the crisis? 2) How did the crisis affect IFC’s development and investment outcomes? 3) How effective was IFC’s short-term response to the crisis? 4)How did IFC adjust its strategy after the crisis? To answer these questions, the evaluation: a) identifies the approaches, priorities and strategies that guided IFC’s investment and advisory operations in Indonesia during the study period; b) identifies the universe of operationally mature IFC investments and evaluates these for development outcomes, IFC investment outcomes, and IFC work quality; c) compares the performance of the Indonesian mature investment portfolio with those of the East Asia Region and the IFC-wide results for projects evaluated under the XPSR system; d) identifies the factors affecting the outcomes of the investment projects, and advisory projects; and e) identifies the aspects of the business climate that currently hinder private sector development in general.
Recommendations
The main recommendations of the CIR are for IFC to:
- Work with the World Bank and other multilateral development banks (MDBs) to help the Government of Indonesia to introduce reforms in the infrastructure and in bond market development to facilitate greater private sector involvement;
- Scale-up operations to support small and medium enterprises (SMEs) and agribusiness projects with strong linkages to the rural economy and SMEs; and
- Strengthen environmental supervision of IFC projects to improve their compliance with IFC’s environmental requirements.
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