�TRADE AND INVESTMENT BETWEEN THE EU AND INDONESIA by kqm6E5

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									                             TERMS OF REFERENCE
                STUDY: "Indonesia Export Quality Infrastructure" - 244000


1.      BACKGROUND


1.1. Current state of affairs in the relevant sector

The Government of Indonesia's (GoI) policy direction stated in the Mid-Term Development Plan
(MTDP) 2010-2014, includes within its priorities in the economic field the improvement in
export levels, through diversification of exports, improved quality of export products, improved
export promotion and supporting services, upgrading international trade diplomacy capacity and
trade facilitation measures. Focus for the coming years will be on products with a higher value-
added, among them being food and processed food products, fishery products and agricultural
products.

Indonesia is a country open to foreign trade, but its 24% exports-to-GDP ratio of 2009 is still
relatively low compared to similar rates for ASEAN as a whole and for other regional
competitors. A number of issues impede the realisation of Indonesia's trade openness potential:
    The lack of a properly defined trade strategy and timeframe for trade policy adjustments.
     Moreover, there is little co-ordination between stakeholders (Ministries at central level, local
     authorities, business sector, donors) in the definition of these strategies/policies
    Insufficient concentration of efforts in competitive export sectors
    Weak export promotion and export supporting services
    High costs and delays in the transportation and import/export clearance process
    Difficulties in meeting international requirements in technical and phytosanitary standards
    Low technical skills in SMEs in export and marketing matters
    Low productivity (lack of capital investment and low labour skills) compared to competing
     countries
The key problems identified which prevent a further integration of Indonesia into the
international trade system and which will be addressed in this programme can be summarised as
follows:

a) Trade Policy related to export quality infrastructure:

The Government faces challenges in the formulation process of trade policy. There is a need for
an effective policy framework in line with new economic realities of Indonesia, and the need to
support this framework through a coherent trade development strategy (taking into account
competitiveness, key products, markets, competitors, relation with the actual situation of the
productive sector, etc). More in particular, there is a need to include in this strategy the export
quality infrastructure constraints that impede the full realisation of full trade potential in key
products and sectors.


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However, capacity constraints within the Ministry of Trade, particularly in human resources, and
lack of coordination with other Government agencies and the private sector in the formulation of
trade policy are key factors affecting this state of affairs. In the particular case of trade policy
related to export quality infrastructure, this is affected by fragmentation of responsibilities of
public institutions in charge of export quality issues in Indonesia, a lack of an integrated road
map for improvement and the insufficient interaction between these public institutions and the
representatives of the business community.

b) Export Quality Infrastructure (EQI) system in Indonesia:

The export quality infrastructure system comprises export quality management and control,
standardisation, inspections and certification, rapid alert systems and market surveillance.

The Trade Support Programme I has supported the identification, adaptation and dissemination
of EU technical standards to the local industry, together with the improvement of quality control
processes and sanitary/phytosanitary compliance of Indonesian exports. Despite progress
observed in the capacity of competent authorities, much still needs to be done, as it has been
expressed by the agencies interviewed and reflected in the programme's final evaluation.

The Indonesian National Standardisation Centre (BSN) is the institution responsible for the
development of the Indonesian National Standards (SNI) applicable to the local industry. BSN
carries out this role by coordinating the work of several standardisation committees covering
specific sectors. These committees involve representatives of relevant government agencies
(Ministry of Industry, Ministry of Trade) and of private companies. BSN is also responsible for
the identification and registration of international standards, their transposition into national
regulations and their dissemination to the local industry. In addition, BSN is also the National
Enquiry Point for Technical Barriers to Trade (TBT) within the WTO.

BSN went through an important internal strengthening process through its involvement in the
Trade Support Programme I. Operational and human resources processes were redesigned, and
the IT system supporting the registration and communication of standards was also revamped.
Support was also provided for the identification of relevant EU directives for its transposition
into Indonesian national standards. In addition, BSN also improved its ability to market its
services to the local industry, and an important increase in consultations was registered during
the programme.

The Indonesian National Accreditation Committee (KAN) has the authority to provide
accreditation services to conformity assessment institutions, including testing laboratories,
inspection and certification bodies, both from the public and private sector. KAN is placed
within the umbrella of BSN, and both institutions report directly to the President. KAN members
consist of representatives of the Government, business world, consumers and scientific and
professional communities. KAN has accredited close to 655 conformity assessment institutions
in Indonesia, mostly testing laboratories. These accreditations have also been recognized
internationally through the International Accreditation Forum (IAF) and the International
Laboratory Accreditation Cooperation (ILAC). However, KAN will require substantial capacity


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building in order for it to expand their international recognition in new fields such as Reference
Material Producer (RMP).

Conformity assessment for industrial products is conducted by a large number of state-owned
and private laboratories. The Ministry of Industry through its Agency for Research and
Development of Industry (ARDI) provides testing services to the industry through its research
and development centres. The TSP I provided substantial support to 6 of these centres (Centre
for Chemical and Packaging, Centre for Agro-Based Industry, Centre for Pulp & Paper, Centre
for Textiles, Centre for Ceramics, and Centre for Materials and Technical Products). Support
included mainly training in laboratory management techniques and testing procedures according
to international standards. However, it also included support to marketing of services to the
industry and facilitation of contacts with international laboratories with the aim of establishing
twining arrangements. However, additional support is still required by these 6 institutes and for
the remaining ones not covered in the TSP I.

The Ministry of Trade (MoT) also has a number of conformity assessment facilities which were
not covered in the TSP I:

The Directorate for Supervision and Quality Control of Goods (Dir PPMB) under the Directorate
General of Foreign Trade has testing laboratories facilities to conduct calibration and product
certification and also registration for domestic and import for mandatory standard (SNI) and
rubber exports. These facilities need to be assessed in order to obtain international recognition.

In addition, the Centre for Standardisation under the Secretary General of the MoT has as main
tasks (1) to formulate the national standard (SNI) to be harmonized with international and
regional standards due to AEC; (2) to make sure non-oil gas export are in line with international
standards; and (3) to register the Conformity Assessment Body (CAB) which will conduct
conformity assessment for mandatory standards (domestic and foreign).

The MoT also has a directorate of Metrology which has responsibility to conduct legal metrology
and also has the capability to conduct calibration for several measurements, such as mass,
dimension, pressure and force.

In the specific area of food safety, a number of government agencies are involved in regulatory
and inspection matters. The National Agency for Drug and Food Control (BPOM) is an
autonomous agency reporting directly to the President, and with responsibility for food safety
legislation, control, inspection (there are 4000 district food inspectors in Indonesia), laboratory
services information and education/training of food inspectors. BPOM inspects food
manufacturers and distributors in Indonesia through its central laboratory and small branch
offices in 26 provinces. However, its tasks are constrained by limited technical and scientific
capacity, and poor laboratory facilities.

Other agencies have an important role in the food safety framework in Indonesia:
  The Ministry of Agriculture: sets technical standards for quality of fresh food, maximum
   residue limits of contaminants and use of pesticides, animal drugs and hormones. It also

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    provides health certificates for importation and exportation of fresh foods from farms and
    animal husbandries.

  Ministry of Health: establishes guidelines on good hygienic practices for ready to eat food,
   monitors human health problems due to food borne diseases

  Ministry of Industry: establishes guidelines on good manufacturing practices, sets technical
   standards and regulations related to quality standards for animal food

Of particular importance for Indonesian trade is the seafood industry. In this sector the Ministry
of Fisheries and Marine Affairs (MMAF) plays an important role. MMAF establishes guidelines
on good practices, distribution and manufacturing of fish products. It also sets quality standards
and the use of animal drugs and hormones. Through its inspection services it provides
surveillance on fish and marine products and their production facilities, issues health certificates
for import/export of seafood and also awards quality certification to fisheries establishments.
MMAF has a National Centre for Quality Assurance (NCQC) and 15 provincial fisheries
laboratories, involved in testing for issuing of mandatory health certificates for export of seafood
products.

Activities conducted through the TSP I in support of MMAF such as the reinforcement of
inspection regulations, training of inspectors and industry, provision of equipment and setting up
of quality management process at the competent authority have had an impact in the reduction of
rapid alerts registered at the EU border. This model of support is applicable to other sectors of
the Indonesian exporting industry.

Concerning metrology and calibration services, these are the responsibility of the Research
Centre for Calibration, Instrumentation and Metrology (Puslit KIM), who belongs to the
Indonesian Institute of Sciences (LIPI). All metrological activities in Puslit KIM aim at the
development of a national measurement reference for the standards and conformance system.
The duties of Puslit KIM are to prepare policies and guides, provide technical assistance, prepare
plans and programmes, carry out research and services in the field of metrology and
instrumentation, as well as conducting evaluations.

Indonesia is part of the Association of South East Asian Nations (ASEAN). In the context of the
regional integration and the development of a single market and production base, ASEAN has
engaged in cooperation on standards and conformance through Mutual Recognition
Arrangements. ASEAN is focusing on Cosmetics, Electrical and Electronic Equipment, Agro-
based products, Fishery, and Pharmaceuticals. Reference Laboratories are being established, and
“ASEAN Guidelines for Food Testing" have been produced. It will be important to take these
regional initiatives into account.

1.2. EU Cooperation in the sector: EU-Indonesia Trade Support Programme II

The EU-Indonesia Trade Support Programme I, finalised in April 2008, had already supported
the identification, adaptation and dissemination of EU technical standards to the local industry,
together with the improvement of quality control processes and sanitary/phyto-sanitary
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compliance of Indonesian exports. Despite progress observed in the capacity of competent
authorities, much still was left to be done, as it has was expressed by the agencies interviewed
and reflected in the programme's final evaluation.
The Trade Support Programme II, started in December 2009, provides continuity to the activities
started by the TSP I in the area of EQI. The objective of the TSP II is to facilitate a further
integration of Indonesia into the international trade system. It will achieve this specifically
through an emphasis on the upgrading of the quality infrastructure that supports Indonesia's
access to international markets.

Component I: Policy Development will pursue a cohesive legal, regulatory and institutional
framework for the strengthening of the overall EQI system. It will support a MoT-led process to
further strengthen export development and the specific role of EQI. Specific activities within this
Component are:
      1. Technical assistance to analyze the constraints to export development for priority sectors,
         with a particular emphasis on EQI issues
      2. Provision of expertise to review trade policy processes across Ministries
      3. Provision of expertise to map the current institutional framework supporting the EQI
         system and to advise on its revision and clarification
      4. Provision of expertise to support the design of a strategic roadmap for EQI improvement
      5. Capacity building to identify and prioritize EQI areas and agencies for support, and
         define action plans for their improvement
      6. Training to strengthen the capacity of the MoT and relevant stakeholders to formulate
         trade policy for improvement of export development and quality infrastructure
Component II: Institutional strengthening will provide technical assistance to the range of
government institutions engaged on EQI and related activities. The support provided will be
based on the strategic definition and prioritisation produced by Component I.

Within Component I activities, a first study on Indonesia's market access to the EU has already
been launched and will be completed by November 20101. The study will analyse the constraints
and opportunities of Indonesian exports into the EU market, with a strong emphasis on EQI
issues preventing the realisation of the full export potential. This study corresponds to Activity 1
within TSP II Component I. The study subject to these ToRs will complement the one already
launched, and will refer to activities 2-4 within TSP II's Component I.

The implementation of the TSP II is a responsibility of the Ministry of Trade (MoT), who has
appointed a Programme Director. The main function of the MoT and the Programme Director is
to coordinate the activities of the Programme with all different Government agencies involved in
EQI issues (National Standardisation Board, National Accreditation Board, Ministry of Trade,
Ministry of Industry, Ministry of Marine Affairs and Fisheries, Ministry of Agriculture, Foods
and Drugs Administration and others). A Technical Advisory Board including representatives of
all these agencies has already been established.


1
    "Indonesia Trade Access to the EU: Opportunities and Challenges"

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2.       OBJECTIVES

2.1.     Overall objective

The Overall Objective of the study is to contribute to a further integration of Indonesia into the
international trade system, through the upgrading of the Indonesia's EQI system.

The Specific Objectives of the study will be:

        To analyse the institutional arrangements related to Indonesia's EQI system and the
         decision making processes leading to trade policies in this area

        To propose a vision for an improved Indonesian EQI system and a strategic roadmap to
         reach it, in consultation with different stakeholders

        Mobilise stakeholders into the endorsement of this blueprint and roadmap

The results to be expected are:

        Understanding of gaps and duplication of activities affecting the Indonesian EQI system
         and its related trade policy processes
        Consensus on a vision for improvement which engages stakeholders


2.2.     Requested Services and Approach

   Analyse background documents related to the support provided by the EU in this area
   Analyse terms of reference and work being carried out by first TSP II study in order to
    ensure integration. This integration is particularly important when it comes to the analysis of
    the capacity constraints in agencies involved in the Indonesia's EQI system
   Identify and analyse support activities provided by other donors in this area
   Identify and analyse government regulations applicable to the Indonesia's EQI system and its
    related trade policy processes
   Map Indonesia's EQI system and related trade policy process. Identify government agencies
    involved, describing their detailed roles and responsibilities, organizational structures, and
    degree of involvement in EQI trade policy decision making process
   Based on this mapping, identify gaps and duplication of roles & responsibilities in the
    Indonesian EQI system and related trade policy decision making processes
   Analyse the ASEAN level strategies for enhancing EQI systems across the region and assess
    how an Indonesian strategy would best be linked with the work at regional level. This




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      analysis should include contacts with the ASEAN Secretariat and also take into account
      cooperation programmes such as such as APRIS II2
     Benchmark Indonesia's EQI system against those models applied by relevant export
      competitors, particularly in the Asia region
     Support TSP II Programme Director in the organization and running of a 1 st workshop where
      the results of the analysis work are presented and discussed; and in the incorporation of
      comments made in this workshop into the final analysis document
     Based on the gap analysis, the results from the first TSP II study, the benchmarking of EQI
      models applied in competing exporting countries, and the ASEAN regional strategies in
      terms of EQI integration, support the TSP II Programme Director in the design a vision for
      an improved Indonesia's EQI system, which takes into account the country's institutional
      realities, export priorities, capacity constraints and competitiveness level
     Support TSP II Programme Director in the organization and running of a 2nd workshop where
      the vision is presented and discussed, and in the incorporation of comments made in this
      workshop into the final vision document
     Based on the agreed vision, support the TSP II Programme Director in the design of a
      strategic roadmap for Indonesia's EQI system improvement. This roadmap will also take into
      account the recommendations from the first TSP II study in terms of capacity building
      improvements needed by the different agencies involved in Indonesia's EQI system.
      Therefore, the strategic roadmap would include:
          o Recommended modifications in the regulatory framework related to the EQI system
          o Recommended clarification of roles and responsibilities of different agencies
               involved in the system
          o Redesign of trade policy processes related to EQI and which involve several agencies
          o Prioritisation of agencies that could be candidates for a more extensive capacity
               building programme
          o Preliminary Identification of equipment requirements
     Support TSP II Programme Director in the organization and running of a 3rd workshop
      where the roadmap is presented and discussed, and in the incorporation of comments made in
      this workshop into the final roadmap document
     Participate in the dissemination event planned for the first TSP II study in order to obtain
      feedback on the recommendations for capacity building activities
     Prepare a paper incorporating all elements (analysis document, vision and strategic roadmap)
      for publication and distribution
     Prepare and conduct in cooperation with the Ministry of Trade a dissemination event
      including the presentation of the paper


2.4.       Required Outputs




2
    Asean Programme for Regional Integration Support

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    A paper to be published including the analysis document, vision and strategic roadmap for
     EQI improvement, which will be used as guidance in the implementation of TSP II
     Component II
    Three workshops with stakeholders to discuss contents of the paper
    A final dissemination event


3. EXPERTS PROFILE

The selected company shall provide a Consultant Team comprising a Team Leader (Senior) and
1 Expert (Senior) to undertake the assignment. The profiles of these experts are described below.

The Consultant Team should work under the supervision of the Programme Director of the TSP
II, and in close co-ordination with the Delegation of the European Union in Jakarta. Moreover,
the Consultant Team should cooperate closely with the team working under the first TSP II
study.

Expert 1: Team Leader

Location         Jakarta, Indonesia
Category         Senior
Qualifications    Minimum Masters Degree or equivalent in business administration,
and Skills         economics or international trade
                  Fluency in English both written and oral
                  Excellent communications skills and ability to interact with high level
                   business executives and government officials
Professional      At least 10 years of professional experience in economic analysis in
experience         developing countries, particularly in export development projects
                  Sound expertise in issues affecting export quality infrastructure
                   systems, preferably gained in a developing country environment
                  Working experience in South East Asia, including Indonesia, would be
                   an advantage

Expert 2: Export Quality Infrastructure Expert

Location         Jakarta, Indonesia
Category         Senior
Qualifications    University Degree in industrial engineering, business administration,
and Skills         economics or international trade or other topics related to the issues
                   addressed by the assignment
                  Fluency in English and Bahasa Indonesia both written and oral
                  Excellent communications skills and ability to interact with high level
                   business executives and government officials

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Professional          At least 10 years of professional experience in export development
experience             issues
                      Sound expertise in factors influencing export quality infrastructure in
                       Indonesia
                      Substantial knowledge about the current trade and export quality
                       infrastructure regulatory framework in Indonesia
                      Substantial working experience in South East Asia, in particular
                       Indonesia


4. LOCATION AND DURATION

Indicative starting date: Mid August 2010

Indicative end date: End December 2010

Total duration of the assignment The duration of the project is 150 calendar days. The
assignment will have a break during the Idul Fitri festivities (10th – 20th September). Indicative
milestones are:

       1st Mobilisation of team in Jakarta: Mid August 2010
       Approval of Inception Report: End August 2010
       2nd Mobilisation of team in Jakarta: End Sep 2010
       First workshop: End September 2010
       Second workshop: Mid October 2010
       Third workshop: Mid November 2010
       Dissemination event: End November 2010
       Final Report: Beginning Dec 2010

Inputs should follow the schedule below:


LOCATION/ACTIVITY                                                                   Expert 1 Expert 2

Home Base:                                                                          8           5
Desk Research                                                                       2           1
International travel (2 working days per trip "in/out" of Indonesia)3               4           4
Report writing                                                                      2




3
 International travel time will not be applicable if experts are based in Indonesia and in that case the equivalent
working days will be added to those in Indonesia

                                                          9
South East Asia                                                        12
International travel (1 working day per trip "in/out" of Indonesia)    3
Field research (@ 3 working days per country visited)                  9

Indonesia                                                              65       65
Briefing at the EC Delegation
Desk and field research
Assistance to Ministry of Trade in workshops
Organization of dissemination event
TOTAL                                                                  85       70


Location of assignment:

Most of the activities will take place in Indonesia, particularly Jakarta. The Team Leader will
travel to 2 or 3 South East Asian countries in order to analyse their export quality infrastructure
systems.


5.       REPORTING

An Inception Report shall be submitted within ten working days of the start of the assignment. It
will include:

        understanding of the objectives and context of the assignment
        plan of activities
        description of the methodology to be applied
        reasoned suggestion for the South East Asian countries to visit and timing
        proposed outline for the documents to be produced
        proposed structure for the different workshops and for the dissemination event.

The EU Delegation and the Ministry of Trade will approve this report within seven calendar
days.

The final version of the Paper to be published will be submitted after the 3rd Workshop and will
be approved by the EU Delegation and the Ministry of Trade within seven calendar days.

The Final Report, which will include all the contents of the Paper, summary of the results of the
dissemination event and the summary of meetings conducted, shall be submitted within seven
calendar days after the dissemination event. The Final Report will be approved by the EU
Delegation and the Ministry of Trade within 30 calendar days after reception.




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All reports shall be submitted in English, except the Paper which will be published in English
and Bahasa Indonesia. The Final Report should be provided in electronic format, as well as three
hard copies. All reports must bear the following statement on the inside title page:

"This report was commissioned and financed by the Commission of the European Communities.
The views expressed herein are those of the Consultant, and do not represent any official view of
the Commission."


6.     ADMINISTRATIVE INFORMATION

6.1    Important Remarks

During all contacts with the Indonesian Authorities or any other organisation, the experts will
clearly identify themselves as independent consultants and not as an official representative of the
European Commission. All documents and papers produced will clearly mention on the first
page a disclaimer stating that these are the views of the consultant and do not necessarily reflect
those of the Commission.

Documents acquired during the assignment will be submitted to the EU Delegation together with
the Final Report. All document, reports, or other material acquired during the conduction of the
study and relevant to EU-Indonesia relations will be submitted to the EU Delegation at the end of
the study, and will remain available for further missions and/or projects.

Prior to the commencement of the study, the expert should obtain, where necessary, visas for
Indonesia.

6.2    Budget Information

The Consultant Team should consider the need to travel to the main Indonesian cities (e.g.
Surabaya, Yogyakarta, Bandung, Medan, Makassar) in order to conduct the field research. A
budget for intercity travel should therefore be foreseen.

The Team Leader will travel to 3 South East Asian countries in order to analyse their export
quality infrastructure systems. A budget for air travel to these countries should be included.

A budget for the publication and dissemination of the Paper should be foreseen, for an estimation
of 300 copies, to be distributed in Indonesia.

The 3 workshops planned in the assignment will be held within the Government premises, so
there is no need to allocate any budget. However, a budget should be allocated for the
organisation of the dissemination event. The following expense items should be considered:
booking of a suitable venue in a high-end Jakarta hotel for 1 day for an estimated 100 attendants;
production of invitation lists, printing and distribution of invitations and of conference


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documentation; follow up on the confirmation of attendance; reception of participants;
promotional materials used in the event; invitations to press and media.

No provision is foreseen for renting office space. Local transport and office facilities (notebook
computer, printing, copying, telephone/fax and internet facilities etc.) have to be arranged
directly by the Consultant and will not be provided by any EU office/delegation/project.
Framework contractors should note that intra-city transport costs are considered as part of Per
Diem.

A budget for translation of documents Bahasa Indonesia/English should also be included.

There will be no interim payment.

Taxes will not be reimbursed under this contract.




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