| 4. In which ways is the initiative creative and innovative?
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As mentioned in the problem analysis, we need to solve the limited accessibility problems, potential fraud, and data reliability regarding government revenue payment. Based on the geographical and demographical condition of Indonesia, these problems cannot be solved through conventional ways, such as adding more offices/branches and human resources, etc. Therefore, the government has initiated more innovative methods (MPN G2) by increasing the number of payment points and utilizing Information Communication Technology.
Further innovation is that MPN G2 is a eco-friendly because it is paperless. In the previous system, taxpayers must bring several paper documents to the bank’s teller. Through MPN G2, taxpayers only need to bring ID Billing, which stored by the teller to inquire the transaction from settlement system or through any available electronic payment channels to make payment, therefore it is paperless. Moreover, it also eliminates the submitting tax payment data from documents by the teller, thus it is more effective and reduces human error.
MPN G2 also promotes a cashless society with the availability of e-payment channels. E-payment method reduces the use of cash so that people does not be bothered of carrying cash and worried of being robbed, especially for women.
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| 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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There several parties that involve in the implementation of MPN G2. Firstly, Directorate General of Treasury which act as a party who responsible for settlement system. Second, Directorate of Taxation and Custom who manages the billing system. Third, Banks who become Collecting Agents and provide payment points, including e-payments. The parties are joined together by connecting their systems in order to ensure the tax payment process are quick, safe and accountable.
The parties who also implemented MPN G2 are taxpayers as the ultimate user of the service. This system was designed to bring the service closer to them, and one way to indicate the success of the implementation is by measuring the degree of their satisfaction.
MPN G2 is a national-wide scale program and it affects millions of Indonesia citizen (within productive age) who automatically become the tax object. This massive population affected by MPN G2 means it needs a reliable system to avoid any human/manual interruption within the payment process and a transparency scheme to ensure that their tax money is well received by the government.
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| 6. How was the strategy implemented and what resources were mobilized?
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The steps conducted prior to the implementation are:
1. Reformulating previous business process. It began with analyzing the problems occurred from the previous government system and working together with other Directorate within Ministry of Finance that related directly to government revenue such as Directorate of Taxation and Directorate of Custom and Excise to reformulate old business process. (2009)
2. Creating Design System based on New Business Process. After establishing a new business process, IT unit of Directorate General of Treasury designed appropriate system based on the new business process. (2010)
3. Establishing Billing and Settlement system. The first parts of the system that needed to be built are Billing and Settlement System. (2011-2012)
4. Setting Collecting Agents Requirement (CAR) as a standard for Collecting Agents to develop IT solutions used in government revenue administration system. CAR is needed to standardize collecting agent system which developed by different banks. (2011)
5. Selecting Banks who want to join in the MPN G2 System as a Collecting Agent by testing their system to meet CAR. The banks must pass both Integrated and User Acceptance Test System to ensure that their system is enabled to connect with MPN G2 System in administering government revenue. (2013)
6. Payment testing on the selected bank to observe the payment process until the reporting process (produced by Local Treasury Office, in order to ensure that Collecting Agent’s system is able produces reliable data for the State Treasury and Budget System. (2013)
7. Educating and disseminating process of the new system. Before the implementation of new system, disseminations were conducted in several major cities of Indonesia. Ministry of Finance has hundreds of regional office across the country. With the support of its staffs, education process of MPN G2 implementation performed massively, especially to its customers. Another strategy to create public awareness on the new system is by promotion via mass-media. (2013 – 2014)
8. Parallel Launch of the new and the previous system (MPN G1) in the first year of the implementation. The strategy was conducted as not all taxpayers are aware of the new system. Moreover, taxpayers needed to adjust their behavior on tax payment. (2014)
9. Evaluation. Evaluation of the new system performed regularly to list any problem in the first year of implementation. This activity involved all parties, thus coordination among them is very important. (2015 – present)
In order to develop MPN G2 system, the government had to prepare sum of the fund in the state budget which is allocated for establishing the main infrastructure of the system and conducting promotion and dissemination to the public. Banks also supported the promotion of MPN G2 by delivering disseminations to their customers. It requires only several billion Rupiahs to develop and maintain the system which can manage million of transactions and approximately three thousand trillion Rupiah within 2014-2016
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| 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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The stakeholders involved in the design of implementations are:
1. All of Directorate General in the Ministry of Finance which related to government revenue, including Directorate General of Treasury, Directorate General of Taxes, Directorate General of Custom and Excise, and Directorate General of Budget.
The representatives of each Directorate General has discussed the formulation of the new business process and the design of the system. The problems occurred in MPN G1 has triggered the initiative.
2. Banks as collecting agents.
One of bank activity related to financial liquidity is collecting fund from customers. By delivering the service of government revenue payment, it also ensures bank’s liquidity.
Furthermore, those parties also become the stakeholders of MPN G2 implementation along with other parties such as:
1. Taxpayers.
Taxpayers are the most highly engaged with MPN G2, not only use MPN G2 as a tool to fulfill their obligation, but tax money eventually will indirectly yield them as a citizen in form of public services or infrastructures.
2. Other Public Services
MPN G2 was designed not only for tax payment but also for other government revenue payment, which related to other public services such as immigration duties, import/export duties, harbor fees, coal, oil and gas royalties fee, marriage and divorce fees, etc. With its real-time notification system to all stakeholders, other public services are provided in faster, effective, and efficient way.
3. Directorate of Accounting and Financial Reporting.
The final user of the data produced by the system is the Directorate of Accounting and Financial Reporting. MPN G2 generated more reliable government revenue data to be used in Government Financial Report
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| 8. What were the most successful outputs and why was the initiative effective?
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The most important output of MPN G2 is the availability of more customer-oriented public services. The number of banks who became collecting agents/payment points in MPN G1 were only 2,488 of selected branches (tellers) of banks. However, this number of payment points has increased massively in MPN G2. Today, 80 banks have joined MPN G2 as collecting agents and deliver this service at all its branches with the total more than 15,000 tellers plus the availability of millions of e-payment channels such as ATM, EDC machines and internet banking across Indonesia, adding up the number of payment points vastly. The notification system to all stakeholders after the payment supports other public services to be performed faster, effectively and efficiently and creates transparency which able to eliminate any backdoors activities and potential risk of corruption.
Other successful output of MPN G2 is the system can produce more reliable of government revenue data to improve the accountability of government financial report and promoting good governance. The Indonesian Supreme Audit Institution also appreciates government’s effort in this matter.
MPN G2 works effectively as it is supported by all stakeholders including taxpayers. They acknowledge that the government revenue system needs improvement in order to enhance its services. They support these changes because it also benefits them in term of time and cost saving.
All those outputs shows that this initiative is in line with SDG’s goal in building effective, accountable, and inclusive institution in all levels.
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| 9. What were the main obstacles encountered and how were they overcome?
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There are always obstacles in the implementation of a new system, including MPN G2. These obstacles might occur in many forms, internally or externally.
The internal obstacles came from:
1. All Directorate General who are the stakeholders of MPN G2.
Coordination was the most difficult part, which stakeholders have different interests in the system. There 80 banks with different systems and three billings systems need to be coordinated. Continuous discussions were performed to find the best solution. These coordinations occurred within all stages of the implementation, prior and after the implementation, including after the evaluation process when a new problem was found and need further adjustments.
2. Maintaining the stability of IT Infrastructure.
MPN G2 system is highly depended on information and communication technology, thus the stability of its infrastructure need to be maintained 24/7. In the beginning stage of implementation, the IT Unit was unable to provide new infrastructure and used the existing one. As a result, there were moments when the connection between collecting agents and settlement system was lost/down. The problem was solved as the new infrastructure was available and implemented.
Several external obstacles also encountered in the implementation of MPN G2, such as:
1. Time constraint related to the development of e-payment channels.
As collecting agents, banks are required to develop at least one e-payment channel. However, the capability of each bank to develop their e-payment channels is different because of their resources and internal policy. This condition caused the effort to increase the number of e-payment channel needed longer time.
2. Taxpayers change management
The business process of MPN G1 is completely different compares to MPN G2. MPN G1 had been applied for more than 7 years since 2007, thus taxpayers were already accustomed with MPN G1’s business process. The adjustment of their behavior takes time and efforts. To deal with this problem, the education and dissemination program were performed by all parties.
3. Internet Network Coverage
As mentioned above Indonesia is a big country which extending more than 5,000 km from east to west. With more than 13,000 islands, there are some remote areas in Indonesia with the lack of internet coverage that caused taxpayers unable to create ID Billing. This obstacle was solved by asking collecting agents to help them to create one
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