Gov. Rev. System Gen 2 (MPN G2) For Flexibility and Accountability of Gov. Rev. Transaction
Directorate General of Treasury (Ditjen Perbendaharan)

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
As an archipelago country with more than 13,000 islands and having more than 240 million of citizens, Indonesia poses a unique problem related to public service. A breakthrough to improve public service quality regarding this massive scale of the population had performed by the government. The spirit of bureaucracy reform in Indonesia provokes DG of Treasury to reaffirm its role in delivering better public services. One of the innovation is improving the government revenue payment system, which implemented in form of Government Revenue Module (Modul Penerimaan Negara-MPN-) Gen-2. The initiative was needed as there were many problems within the previous system, MPN G1, related to service quality, data reliability, reporting accountability, and good governance. The primary reasons of the innovation are: 1. Limited accessibility and costly for taxpayers. Only authorized (and selected) branches of certain banks are allowed to receive tax payment. Consequently, there is a high dependency on the presence in the working hour of Bank’s teller, which taxpayers were only able to fulfill their obligation via Bank’s teller (approximately 6 hours in a day). Thus, the impact to taxpayers is twofold, first, those who live in a city without tax collecting bank must travel to another city to make a payment. Second, a long queue of taxpayers in a tax collecting bank was a commonly happened and unavoidable, especially on a due date of tax payment. These ineffective and time consumed process leads to a low level of consumer satisfaction and may result in a case of robbery, as taxpayers must carry cash to the tax collecting bank. 2. Potential fraud. The approval of tax payment was conducted by teller manually outside the system. Moreover, the payment system and settlement system was un-integrated. Thus, the business process is relatively prone to a fraud and corruption. 3. Data reliability. Decentralized of 2,488 accounts spread across on each collecting agent (bank) caused difficulties in cash management and control. Furthermore, the conventional and lengthy process of data reconciliation between Banks and MPN G1 settlement system reflect the lack of transparency and accountability. Based on that background, MPN G2 was developed in order to improve public service quality by creating a better system design and harmonizing business process. Eventually, it will build a global partnership with taxpayers, banks, and other stakeholders, and the most important are increasing customer satisfaction and transparency. Finally, it will secure government’s revenue to fund all government’s program in order to increase national economic growth.

B. Strategic Approach

 2. What was the solution?
MPN G2 is an integrated government revenue system which consists of Billing, Settlement, and Collecting Agents (Banks and post office) System. MPN G2 provides flexibility for taxpayers to fulfill their obligation as there are many Banks, with all its services/payment channels, including teller, Automatic Teller Machine (ATM), Internet Banking and Electronic Data Capture (EDC) machines, involve in MPN G2 system. The System is also enabled to generates more reliable data in improving the accountability and transparency of Government Financial Report.

 3. How did the initiative solve the problem and improve people’s lives?
MPN G2 was designed to improve public service related to tax payment by providing tax payment system with many options of payment methods, including e-payment (ATM, Internet Banking, EDC Machine, etc). MPN G2 provides more reliable data as its system integrates front-line-bank, billing, settlement, and government reporting system. Within MPN G2, all branches of any Bank automatically become collecting agents and have to accept tax payment from any taxpayers, not only its customer. The closer payment points to taxpayers will save more time, reduce cost, and more secure from potential robbery. Furthermore, Banks must develop collecting agent system not only on the teller but also on other electronic payment channels as mentioned above. Through e-payment channels, taxpayers have more flexibility to make payment 24/7, anytime anywhere, as the government’s program to enlarge internet broadband network coverage (PALAPA RING PROGRAM) is currently in progress. Through wider coverage service under MPN G2 scheme, the problem experienced by taxpayers in remote areas is solved. This has led to the increase of customer satisfaction index, 4.3 scales of 5, on the public service as taxpayers based on the survey conducted by University of Gadjah Mada in 2016. By integrating all system, MPN G2 removes all conventional process of payment. Hence, it eliminates any potential frauds as the system produces a real-time notification method of every transaction to all parties (banks as collecting agents, settlement system, billing system and taxpayers), so the check-and-balance mechanism among them works effectively. It shows an improvement of transparency principle within public service. The next problem solved by the implementation of MPN G2, that the integrated system has led to more reliable data where single data flows from one system to another until the transaction was settled. The same data will also be established in the government’s financial report database and support the accountability of annual government financial report.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
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.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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.
 6. How was the strategy implemented and what resources were mobilized?
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

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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

 8. What were the most successful outputs and why was the initiative effective?
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.

 9. What were the main obstacles encountered and how were they overcome?
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

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The main target of the initiatives are taxpayers, thus their satisfaction on the service becomes the main concern. Based on the data of tax payment methods, the use of e-payment for government revenue had increased from 10% of total transaction in 2015 to 20% of total transaction in 2016. Moreover, a survey conducted in 2016by a well-known university in Indonesia, University of Gadjah Mada, the implementation of MPN G2 has a gain satisfactory index of 4.3 scales of 5. Other key benefits of the implementation of MPN G2 is the increase of people trusts to the government in managing their tax payment. The transparency process of MPN G2 ensures people that their money is well received at Government Cash Account. Furthermore, as mentioned in the previous part, MPN G2 payment supports other public services to be performed more transparent way, such as payment for immigration duties or licensing fees. Therefore MPN G2 is able to eliminate any backdoors activities and potential risk of corruption. This condition also led the increase of people’s trust to government. Based on the current data of Directorate General Treasury, the trend of total transactions using MPN G2 has increased 5 times higher during 2016 from approximately 2 million transactions on January became 10 million transactions on December. By contrast, the MPN G1 transactions decreased almost by 50%. Total transactions on January 2.7 million and on December only 1.5 million. It shows the increasing of citizen’s trust with the new government’s revenue system

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The payment is based on Billing Code system thus it avoids fraud activity or corruption and improves the integrity of public services. Moreover, MPN G2 increases the reliability of data and eventually improve the accountability of government report. In the previous system, a reconciliation of data between settlement system and collecting agent’s system needs to be conducted for unmatched data and this is an indication of unreliable data. On the other hand, the design of MPN G2 has eliminated potential unmatched data, thus its database is more valid and reliable to be used for reporting. Furthermore, there are other government and private units who also want to utilize the database of MPN G2, such as Extractive Industries Transparency Initiative (EITI) and Indonesia's Corruption Eradication Commission. While a big company such as Gudang Garam also using MPN G2 as its excise payment system. It indicates that MPN G2 has generated trustful data so that other entities are willing to use it for their operation.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
For women and girls as taxpayers, the implementation of MPN G2 give benefit as they do not have to go to the city or bank to fulfill their obligation thus it reduces the risk of crime incident on them. For disable people -based on the Government’s data in 2015 there are more than 2,8 millions disable people in Indonesia-, the availability of e-payment enables them to pay their tax payment via internet banking at their office or home. MPN G2 system ensures all tax payment are transferred to government cash account. This tax money eventually will be transformed into infrastructure or public services to improve the welfare of citizens in the long term. Another allocation of these tax money is for funding government’s programs including poverty alleviation. Thus, MPN G2 indirectly effect to improve the poorest citizen condition in Indonesia

Contact Information

Institution Name:   Directorate General of Treasury (Ditjen Perbendaharan)
Institution Type:   Ministry  
Contact Person:   Moh Hatta Hasanudin
Title:   Staff of Directorate of Cash Management DGT  
Telephone/ Fax:   +6285215804610
Institution's / Project's Website:  
E-mail:   mhattaar@gmail.com  
Address:   Jl Lap Banteng Timur 2-4
Postal Code:   10710
City:   Jakarta
State/Province:   DKI JAKARTA
Country:  

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