RFI 72049721RFI00004 - USAID Indonesia PADU.pdf

REQUEST FOR INFORMATION

Date of Issuance: March 30, 2021

Reference No.: 72049721RFI00004

Preliminary Activity Title: PARTNERSHIPS FOR PRODUCTIVITY

Deadline to Submit Responses: April 20, 2021; 8:00 am, Jakarta local time

Submit Responses to: proposals-indo@usaid.gov

Dear Interested Parties:

The purpose of this Request for Information (RFI) is to collect written information about an activity with the preliminary title of “PArtnerships for ProDUctivity (PADU)” in which USAID seeks to enhance investment of private sector in vocational training programs through partnerships with vocational training centers, as further described in Attachment 1.

This RFI is open for comments from any US or non-US organization. This is a Request for Information (RFI), not a Request for Proposal (RFP). Do not submit any proposal at this time;

only the information requested in this RFI will be reviewed. Responses will be treated as confidential. A solicitation is expected to be released in mid-June 2021.

USAID is seeking input regarding the list of inquiries contained in Attachment 2. The information provided will be used to help finalize the activity design. USAID may revise the structure and concept of the activity based on comments received but is not obligated to do so.

All responses should be sent using the cover page that is part of Attachment 2 - Response Form to this RFI. All comments must be submitted electronically via email to: proposals-indo@usaid.gov with the subject of “RFI: USAID PADU” no later than the date/time stated above.

This issuance of this RFI will not restrict the US Government’s ultimate approach. Respondents are advised that USAID is under no obligation to acknowledge receipt of the information, answer questions or provide feedback to respondents with respect to any information provided. Any information submitted in response to this notice is voluntary. Not responding to this required does not preclude participation in any future solicitations, if any are issued.

Please note that release of this RFI is not to be construed as a commitment by the US Government to issue any solicitation or ultimately award on the basis of this RFI. USAID is not responsible for any costs incurred in responding to this RFI nor will funding be made available prior to any award. Respondents are responsible for all costs incurred prior to award.

RFI No. 72049721RFI00004

USAID PADU

Thank you for your interest in USAID/Indonesia’s programs and we look forward to your comments.

Sincerely, Nathan Olah Supervisory Contracting Officer USAID/Indonesia

Attachments:

1. Activity Description

2. Response Form and Questions

Attachment 1 - Activity Description

Preliminary Activity Title:

PARTNERSHIPS FOR PRODUCTIVITY (PADU)

Activity Purpose: To enhance investment of private sector in vocational training programs through partnerships with vocational training centers

Geographic Locations:

Indonesia – National and USAID/Indonesia CDCS Priority Provinces 1

Period of Performance:

Five years

Anticipated Funding: USD 5 million

I. Background and Context

While Indonesia has made great strides in advancing access to post-primary education, reaching an 85 percent gross enrollment rate in secondary schools in 2018; the quality of learning remains a fundamental concern. Technical and vocational training and education (TVET) institutions,2 which are managed by multiple ministries, are hampered by theoretical curricula, outdated facilities, a lack of teachers/instructors with practical skills, and weak linkages with the private sector. Decentralized governance has also contributed to inconsistencies or disparities among districts and provinces in the delivery, and quality, of training programs, particularly in the secondary vocational education (SMK) and non-formal training programs known as Balai Latihan Kerja (BLK). Consequently, there are mismatches between graduating students/training participants and the competency and skills needed to enter or progress in the workplace. A World Bank study of employers reported that employees/trainees lack aptitudes and skills in critical thinking, communication, and problem solving that are essential for success in the workplace.3

The Government of Indonesia (GOI) recognizes this challenge and aims to stimulate workforce development improvements, both through formal and private sector training initiatives.

Specifically, President Joko Widodo has called for reforms in TVET institutions and asked that TVET adjust their curriculum, learning materials, work practices, testing, and certification to meet the demands of the business world and industries.4 To spark private-sector investment in workforce development, the GOI is offering tax incentives for businesses that implement vocational training to strengthen the quality of human resources or work via formal and non-formal training institutions. Through the Finance Ministerial Decree, PMK No.128/PMK.03/2019, the GOI is granting firms/employers a reduction in taxable gross income for implementing improved work practices, apprenticeship programs, and other human resource development

1 Current target provinces are North Sumatra, Banten, East Java and South Sulawesi.

2 TVET institutions refer to vocational upper secondary schools, religious-based vocational secondary schools, higher education with diploma programs, vocational training centers (BLK), or other government institutions implementing workforce-related services at national, provincial, or district levels.

3 This study examined employers’ opinions on their employees’ work performance and behavior in various work sectors.

4 https://setkab.go.id/en/vocational-education-system-needs-reforms-reorientation-president-jokowi/ https://setkab.go.id/en/vocational-education-system-needs-reforms-reorientation-president-jokowi/

(“learning”) programs. 5 Companies that implement vocational education programs meeting GOI’s criteria will receive a maximum 200 percent tax deduction.

In developing this activity, USAID has conducted initial consultations with key stakeholders6 and learned lessons from previous workforce development activities. Across these consultations, stakeholders identified the key barrier in addressing the weak linkages/connection and collaboration between the private sector and TVET institution as a lack of support for bridging the two parties to connect and establish partnerships.

Based on Indonesian demand for skilled workers, GOI commitment to workforce improvement backed by incentives, and the novelty of the incentive program, USAID/Indonesia proposes to link and catalyze partnerships among companies with relevant TVET institutions. The activity will compel private sector firms to be anchor partners of TVET institutions, support the private sector to plan and implement vocational training programs in collaboration with TVET institutions, and work with GOI to streamline regulations and guidelines related to utilization of tax deductions and incentives on training activities for the private sector.

USAID/Indonesia will leverage past investments in the Kunci workforce development initiatives, particularly the established relationships with private sector partners, such as Indonesian Employers Association (APINDO) and business associations. Ultimately, this proposed activity will enhance public-private cooperation to improve the quality and productivity of the Indonesian workforce through resources available in-country from both the government and private sector.

II. Relationship to Mission CDCS and ICS

The PADU activity aligns with USAID/Indonesia’s 2020 - 2024 CDCS under DO 2, Inclusive Market-Driven Economic Growth Increased. It will contribute to IR 2.1: Workforce Productivity Increased, and IR 2.1.2: Access to market-relevant vocational and technical training increased, by strengthening market-relevant linkages between technical and vocational training institutions and companies demanding improved labor. The activity will also contribute to IR 2.2: Public and Private Capacity to Expand Economic Growth Strengthened through both IR 2.2.1: Economic policy and regulatory implementation improved and 2.2.2 Private sector engagement to achieve development outcomes expanded. Through this activity, USAID will promote utilization of the GOI tax credit and support companies to apply for the facility, facilitating public and private capacity to expand economic growth while simultaneously improving regulatory implementation.

This activity implements USAID Private Sector Engagement Policy to convene and catalyze private sector resources to improve both their own workforce skills and capabilities as well as GOI technical and vocational training institutions connections to market demand. The activity

5 This Ministerial decree stipulates that vocational training includes on-the-job training such as work practices (praktek kerja), internships and apprenticeships, and other forms of human resources development programs generally termed as “learning” programs. https://perpajakan.ddtc.co.id/peraturan-pajak/read/peraturan-menteri-keuangan-128pmk-0102019 6 USAID/HCP has conducted initial consultations with GOI (the Ministry of Manpower and the Ministry of Education) and several companies. Follow-on consultations with other stakeholders, such as with the Ministry of Industry as well as the Ministry of Finance (DirGen of Tax) on the expectations and mechanics of the tax facility, will take place at the activity design stage.

https://perpajakan.ddtc.co.id/peraturan-pajak/read/peraturan-menteri-keuangan-128pmk-0102019 https://perpajakan.ddtc.co.id/peraturan-pajak/read/peraturan-menteri-keuangan-128pmk-0102019 contributes to the Economic Growth Pillar of the U.S. Indo-Pacific Strategy by enhancing the quality of private sector investment for improving workforce productivity.

The activity is well-aligned to GOI development strategies. The GOI Medium-Term Development Plan (RPJMN 2020 - 2024) lists “Quality and Competitive Human Capital” as the first goal in the plan, which this activity will work to support GOI to achieve.

III. Problem Statement

Collaboration and linkages between the private sector and TVET institutions in Indonesia remains weak. Most companies rely on their own resources to develop the quality of their workers. Consultations with Indonesian employers indicate that many do not believe that the current education and training system provides work-ready employee candidates, especially as technology and automation increasingly characterize modern job operations. Meanwhile, current technical and vocational training programs do not keep up with labor market/industry demand/needs for higher-level skills. Employers thus face challenges in identifying appropriate workers. Factors inhibiting the efficient supply and demand of labor include inadequate labor market information for TVET institutions and training participants; curriculum/training mismatch and heterogeneous quality of TVET providers; limited opportunities for on-the-job training; high labor mobility costs; weak fundamentals among certain industries to engage in TVET and rapid structural change and technological development.7

Improvements are therefore necessary across the entire vocational training system, with a particular opportunity to strengthen public and private sector partnerships utilizing the tax deduction policy. These partnerships are key to addressing the current gaps within TVET institutions and enable them to improve their curriculum, learning materials/facilities, internships and apprenticeships and other relevant learning/training programs critical for students/training participants to acquire market-relevant skills before graduation.

Many GOI priorities have shifted to COVID-19 response, significantly affecting implementation of the ministerial decree on tax deductions. While some businesses struggle to maintain basic operations, there is an opportunity to help enhance their productivity and potentially reduce training costs through the tax deduction. The results of this activity will help provide high quality, productive workers to private sector firms, and revive long-term economic growth in Indonesia.

IV. Development Hypothesis (Theory of Change)

IF private sector firms in Indonesia develop effective collaboration and partnerships with TVET institutions;

And IF these partnerships enable TVET institutions to improve on-the-job trainings, curricula, instruction/learning process, teachers/lecturers/instructors’ skills, and facilities;

THEN TVET institutions will produce graduates with higher-level skills that increase their employability and productivity.

7 Program Information Document. The World Bank (2018).

http://documents.worldbank.org/curated/pt/594741563369992590/pdf/Concept-Stage-Program-Information-Document-PID-Indonesia-Skills-Development-Project-P166693.pdf http://documents.worldbank.org/curated/pt/594741563369992590/pdf/Concept-Stage-Program-Information-Document-PID-Indonesia-Skills-Development-Project-P166693.pdf

V. Goal and Objectives

Goal: To enhance private sector investment in vocational training programs through partnerships with TVET institutions8

Objectives:

1. To improve capacity of the private sector to plan and implement vocational training (human resources development) programs to improve workforce productivity.

2. To catalyze and facilitate partnerships among private sector firms with public and private TVETs to support vocational training programs/activities.

3. To streamline regulations and guidelines related to utilization/implementation of tax deductions/incentives (on vocational training/human resource development programs).

VI. Required Tasks

This activity will support private sector firms in building partnerships with Indonesian TVETs to enhance investments in workforce development programs (vocational training), particularly through utilization of GOI tax deduction policy for the private sector. Under this activity, USAID through a contractor will:

1. Analyze and map private sector entities investing in workforce development capabilities and interested in taking advantage of the tax credit;

2. Analyze and map relevant and qualified TVET institutions within USAID/Indonesia’s priority provinces;

3. Socialize opportunities and linkages between identified TVET institutions with interested companies emphasizing shared value propositions;

4. Facilitate and catalyze creation of partnerships between companies and TVET institutions;

5. Build the capacity of select private sector firms and TVET institutions in planning and managing vocational training programs such as apprenticeships and other industry-based training;

6. Strengthen government current Labor Market Information (LMI) into a dynamic, informative and useful system to inform government’s strategic labor planning both in national and target provinces;

7. Build the capacity of government agencies overseeing management of labor market information (LMI);

8. Disseminate Labor Market Information to target groups and institutions including job seekers and LMI service providers both at government and private sector institutions;

9. Build the capacity of vocational training institutions to improve labor placement services;

10. Assist companies to work through administrative processes and procedures to apply for tax credit;

11. Create and socialize a “how-to build public-private partnership on workforce development” module for relevant ministries, TVET institutions, business associations, and other relevant entities to stimulate independent efforts;

12. Train “Business Developers” at vocational training institutions to reach out to and develop partnerships with the private sector independently of USAID funding.

8 Based on USAID recent consultations with the Ministry of Manpower, USAID will target only government-owned vocational training centers i.e., Balai Latihan Kerja (BLK) in USAID priority provinces.

At the end of five years, USAID expects:

● Strengthened connectivity and partnerships between the public and private sectors entities to align workforce development initiatives with market demand.

● Increased capacity of private sector entities and TVET institutions to plan and implement vocational training programs to improve workforce productivity.

● Increased quality and quantity of private sector interest and investment in vocational training programs.

● Enhanced ability of the private sector to manage partnerships in vocational training (human resource development) programs.

● Improved training curricula and other joint vocational programs at participating TVET institutions to develop the workforce skills required by the private sector employers.

● Strengthened commitment (e.g., signed agreements and/or committed resources) for continuing partnerships between participating private sector and TVET institutions following the end of the activity.

Illustrative indicators may include:

1. Number of partnerships between companies and technical and vocational training institutions created

2. Number of companies that have successfully implemented vocational training programs compliant with tax incentives policy requirement

3. Number of students/participants with improved market-relevant skills

4. Number of students/training participants finding internships or employment with participating companies, including gender and people with disabilities data disaggregation

5. Amount of non-USG resources leveraged

[End of Attachment 1]

Attachment 2 - Response Form

RESPONSE FORM

REQUEST FOR INFORMATION (RFI) NO. 72049721RFI00004

PARTNERSHIP FOR PRODUCTIVITY

General Information

Name of Organization: _______________________________________________

Contact Person:

Name: _______________________________________________

Position Title: _______________________________________________

Email Address: _______________________________________________

Type of Organization (select that apply):

[ ] US Organization, Large Business

[ ] US Organization, Small Business

[ ] Indonesian Organization

[ ] Other - Please indicate: _________________________________

Questions:

(Please note that you are not obliged to answer all questions)

1. How would you best establish/create partnerships between firms and vocational training centers to address skills gaps?

2. How would you align BLK education in response to changing labor market requirements? What is your perspective to ensure BLK is able to apply an adaptive curriculum system approach to continuously comply with labor market requirements?

3. How would you best improve the capacity of government and private sector entities to develop Labor Market Information and labor placement support systems to ensure smooth transition to employment?

4. What do you think would be the best approach and tools- learning, adapting and innovating - in developing a dynamic and informative Labor Market Information system that operationalizes well at national, provincial and at district level of Indonesia?

5. How would you best develop or streamline implementing guidelines related to utilization/implementation of tax deductions/incentives?

6. How would you approach diversity and inclusion throughout your design and implementation process? How would you lead a collaborative effort to eliminate discrimination against, and promote equal opportunity for, all members of society?

7. What performance indicators should be used to measure success? How can the quality of any proposed partnerships be measured?

8. What would be potential challenges/obstacles and opportunities in building such partnerships?

9. Referring activity description as described in Attachment 1- Activity Description, do you have any feedback or suggestions regarding the theory of change; proposed results, required tasks; and proposed indicators?

10. Please provide any additional input beyond questions stated above

[END OF REQUEST FOR INFORMATION]