Notice2023-08412
Notice of Entering Into a Compact With the Government of Indonesia
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 21, 2023
Issuing agencies
Millennium Challenge Corporation
Abstract
In accordance with the provisions of the Millennium Challenge Act of 2003, as amended, the Millennium Challenge Corporation (MCC) is publishing a summary of the Millennium Challenge Compact (Compact) between the United States of America, acting through MCC, and the Government of Indonesia. Representatives of MCC and the Government of Indonesia executed the Compact on April 13, 2023. The complete text of the Compact has been posted at: https://www.mcc.gov/content/uploads/ compact-indonesia-infrastructure-and-finance.pdf.
Full Text
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<title>Federal Register, Volume 88 Issue 77 (Friday, April 21, 2023)</title>
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[Federal Register Volume 88, Number 77 (Friday, April 21, 2023)]
[Notices]
[Pages 24638-24640]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-08412]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 23-03]
Notice of Entering Into a Compact With the Government of
Indonesia
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with the provisions of the Millennium Challenge
Act of 2003, as amended, the Millennium Challenge Corporation (MCC) is
publishing a summary of the Millennium Challenge Compact (Compact)
between the United States of America, acting through MCC, and the
Government of Indonesia. Representatives of MCC and the Government of
Indonesia executed the Compact on April 13, 2023. The complete text of
the Compact has been posted at: <a href="https://www.mcc.gov/content/uploads/compact-indonesia-infrastructure-and-finance.pdf">https://www.mcc.gov/content/uploads/compact-indonesia-infrastructure-and-finance.pdf</a>.
(Authority: 22 U.S.C. 7709 (b)(3))
Dated: April 17, 2023.
Gina Porto Spiro,
Acting Vice President, General Counsel, and Corporate Secretary.
Summary of Indonesia Infrastructure and Finance Compact
MCC has signed a five-year, $649,000,000 Compact with the
Government of Indonesia aimed at reducing poverty through economic
growth.
The Compact seeks to assist the Government of Indonesia in
addressing a binding constraint to economic growth: costly and
underdeveloped financial intermediation, by investing in needed
infrastructure project preparation and structured finance solutions,
and in increased access to finance for micro, small, and medium
enterprises. The Compact aims to unlock financing flows in a way that
will catalyze economic growth and leverage Indonesia's own resources.
The Compact will address this constraint through three projects:
(1) Advancing Transport and Logistics Accessibility Services
(ATLAS) Project;
(2) Financial Markets Development Project (FMD) Project;
(3) Access to Finance for Women-owned/Micro-, Small and Medium
Enterprises (MSME Finance) Project.
Project Summaries
The objective of the ATLAS Project is to improve transport planning
and preparation in the target provinces, responding to the root cause
of inadequate infrastructure project preparation. The project includes
four activities:
<bullet> Transport Planning Reform Activity: This activity will
develop two proof-of-concept multi-modal transport planning projects to
influence the Government of Indonesia to embrace the necessary
institutional, legal, and regulatory reforms required to mandate and
mainstream a multi-modal transport planning approach.
<bullet> Good Practice Infrastructure Projects Activity: This
activity aims to support five infrastructure projects, which are
intended to demonstrate innovative and strengthened approaches to
project preparation, structuring and financing, and procurement and
implementation, so that subnational governments endorse and promote
Public Investment Management Guidelines principles.
<bullet> Public Investment Management Guidelines (PIMG) Activity:
This activity will create a public, online suite of Public Investment
Management Guidelines for infrastructure, designed to improve the
effectiveness and efficiency of public investment.
<bullet> Project Preparation and Delivery Facility Activity: This
activity will provide project preparation, structuring, procurement,
and project delivery support to sub-national governments.
The objective of the FMD Project is to reach financial close on
transactions using structured finance, including participation by
institutional investors and with a focus on local currency
transactions, responding to the root causes of underdeveloped project
financing market and capital markets. The project includes three
activities:
<bullet> Capacity Building/Technical Assistance Activity: This
activity aims
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to build capacity for institutional change within the financial market
ecosystem, including in the areas of green and sub-national finance.
<bullet> Transaction Advisory Services Activity: This activity will
provide transaction advisory services to originate approximately 10
proof-of-concept demonstration transactions.
<bullet> Blended Finance Delivery Mechanism Activity: This activity
aims to mobilize commercial financing for sub-projects by providing
blended finance grants.
The objective of the MSME Finance Project is to increase lending by
formal financial service providers to MSMEs and W/MSMEs in the target
provinces to support their businesses, responding to the root causes of
information asymmetry and borrowers' constraints. The project includes
four activities:
<bullet> Gender-inclusive Value Chain Finance Activity: This
activity will provide non real property-based collateral financing to
qualified Women-owned/Micro-, Small and Medium Enterprises (W/MSMEs)
operating within growing sectors in the five target provinces.
<bullet> Digital and Financial Literacy Enhancement Activity: This
activity will support and enhance the viability of W/MSMEs by providing
technical assistance, digital and financial literacy training, and
other demand driven business development support to W/MSMEs.
<bullet> MSME Capacity Enhancement Activity: This activity will
support growth-oriented W/MSMEs that are in an earlier stage of their
journey toward formalization and eventually toward formal finance. The
activity will provide capacity enhancement training to eligible W/MSMEs
to develop business skills, access markets, and increase sales.
<bullet> Augmenting Government Data on MSMEs: This activity will
support the Government of Indonesia in gathering and analyzing MSME
financial and technical performance data.
Policy Reform and the Compact
The ATLAS Project aims to strengthen environmentally friendly and
gender-responsive, inclusive infrastructure preparation and delivery
processes at all stages of the infrastructure project lifecycle, and
creation of the PIMG will require new regulations to mandate the use of
the PIMG and significant adjustment of technical standards and
operating procedures at the national level. Similarly, the key policy,
legal, regulatory, and institutional reforms that will be funded by the
Compact include fundamentally changing the approach to transport
planning by replacing the current single-mode planning exercises
carried out separately at the three levels of government (national,
provincial, district/city) with a multi-modal integrated approach. This
may require adjustment of the relevant legal and regulatory framework
in the transport and planning area.
The policy and institutional reform approach of the FMD Project
will be supportive of a multi-donor push to improve the policy
environment for infrastructure finance, contributing to reform efforts
at the national level, considering lessons learned from the ATLAS
Project's province-level engagement.
A condition precedent to entry into force of the Compact is the
complete legal establishment and staffing of the accountable entity,
the Millennium Challenge Account Indonesia II (MCA-Indonesia II),
including the issuance of all relevant ministerial instructions and
decrees. The Government of Indonesia already enacted the initial decree
to establish MCA-Indonesia II; however, several additional steps remain
that will be critical to complete to ensure MCA-Indonesia II's ability
to implement the program quickly and efficiently.
Compact Overview and Budget
Below is a summary describing the components of the Compact with
the Government of Indonesia. The budget of the Compact is approximately
$698,000,000, which includes up to $649,000,000 funded by MCC and a
Government of Indonesia contribution of at least $48,675,000.
Table 1--Indonesia Compact Budget
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Component Amount \1\
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1. Advancing Transport and Logistics Accessibility $350,270,207
Services..............................................
Activity 1.1 Transport Planning Reform............. 27,021,409
Activity 1.2 Good Practice Infrastructure Projects. 195,385,571
Activity 1.3 Public Investment Management 18,707,129
Guidelines........................................
Activity 1.4 Project Preparation and Delivery 95,614,215
Facility..........................................
Activity 1.5 Support Services...................... 13,541,883
2. Financial Markets Development Project............... 95,914,256
Activity 2.1 Capacity Building/Technical Assistance 26,631,869
Activity 2.2 Transaction Advisory Services......... 15,437,809
Activity 2.3 Blended Finance Delivery Mechanism.... 53,844,578
3. Access to Finance for Women-owned/Micro-, Small and 135,826,437
Medium Enterprises Project............................
Activity 3.1 Gender Inclusive Value Chain Finance.. 72,032,840
Activity 3.2 Digital and Financial Literacy 25,044,897
Enhancements......................................
Activity 3.3 MSME Capacity Enhancement............. 32,512,990
Activity 3.4 Augmenting Government Data on MSMEs... 6,235,710
4. Monitoring and Evaluation........................... 7,000,000
5. Program Administration and Oversight................ 59,989,101
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Total MCC Funding.................................. 649,000,000
Government of Indonesia Contribution............... 48,675,000
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Total Compact...................................... 697,675,000
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\1\ Numbers in table are rounded to the nearest dollar; due to rounding,
they may appear to add up to more than $649,000,000. However, the
total MCC Funding compact budget amount is $649,000,000.
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[FR Doc. 2023-08412 Filed 4-20-23; 8:45 am]
BILLING CODE 9211-03-P
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