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Indonesia
>> Regional Overview >> Indonesia Overview ACTIVITY DATA SHEET
PROGRAM: Indonesia
TITLE AND NUMBER: Foundation Set for Rapid, Sustainable, and Equitable Economic Growth,* 497-011
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $5,619,000 DA; $15,000,000 ESF
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $5,623,000 DA; $18,500,000 ESF
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2004Summary: Indonesia is staging a modest, but fragile, economic recovery. The economy grew by 4.8% in 2000, driven by investment (up 18%) and exports (up 27%). Economic policies and institutions are gradually being strengthened even as political will for reform has stagnated. The legal and regulatory environment is more conducive to private investment and the rule of law. Increased lending to and licensing of small and medium enterprises is opening up access to economic opportunity. However, the benchmark interest rate in 2000 remained a high 14% and inflation accelerated to reach just over 9%. Much work remains to be done in bank and corporate restructuring, in strengthening market institutions and governance systems, in creating opportunities for the disadvantaged, and in informing the public debate.
This strategic objective will set the foundation for rapid, sustainable and equitable economic growth in Indonesia. An array of USAID technical advisors in key ministries and economic institutions are helping create sound policy to stimulate recovery, liberalize the economy and generate sound economic growth. Advisors are working on budget, fiscal, policy and other macroeconomic issues. Technical assistance is helping the Government of Indonesia with debt management, tariff and non-tariff trade barriers, domestic competition, monetary policy and taxation issues.
Key Results: At the strategic objective level, impact is measured by increases in the annual value of Indonesia's non-oil and gas trade. Four intermediate results are critical to achieving this objective: 1) sound economic policy and institutions; 2) a conducive legal and regulatory framework; 3) open access to economic opportunity; and 4) knowledgeable public participation in economic decision-making.
Performance and Prospects: USAID intends to obligate $5.623 million in DA and $15 million in ESF in FY 2001 to set the foundations for rapid, sustainable, and equitable economic growth in Indonesia. Progress has been made in strengthening economic policies and institutions. Asset recovery and corporate debt restructuring have met International Monetary Fund targets for 2000 on revenues collected and amount of debt rescheduled. USAID has helped the Jakarta Initiative Task Force restructure $9.3 billion in corporate debt, which is above its $8 million target for 2000. USAID advisors, working with the Indonesia Bank Restructuring Agency, have facilitated the remittance of over $2 billion to the Ministry of Finance. USAID advisers will continue to work with these two institutions to improve technical expertise and international standards for transparency to meet current and future IMF targets.
USAID macroeconomic advisers have supported changes in the structure of interest rates that have increased the effectiveness of monetary policy; increased understanding of underlying inflation trends and policies to control future inflation; helped move commercial banks to a market based in lending to small and medium enterprises; and improved tax policies. USAID supports the National Development Planning Agency (Bappenas) and the Ministry of Agriculture on developing a sustainable and development oriented food policy. In FY 2000, there was progress in improving the ratio of food expenditures on non?starchy staples to total food for the bottom one-third of the population, as reflected in household surveys. USAID provides analytical assistance to the Central Board of Statistics to improve the quality of data (economic indicators, labor market statistics, price indices) used in macroeconomic policy decision-making.
In FY 2001, USAID plans to provide $3 million in DA and $5.9 million in ESF to fund activities to strengthen economic policies and institutions in Indonesia. Economic advisors and other knowledge transfer initiatives aim to improve economic data analysis and help formulate better policies on trade, fiscal and monetary issues, taxation, the macro economy, bank restructuring, corporate debt restructuring and food.
In order to foster a conducive legal and regulatory environment, USAID advisors have been substantially involved in seven major laws governing competition and anti-monopoly, corporate governance, consumer protection, decentralization, trade, and small and medium enterprise policies. USAID has helped draft regulations establishing a Corruption Commission, Registration of Secured Transactions, and the Good Corporate Governance Code. In addition, USAID has trained parliamentarians in legislative drafting and policy analysis. USAID will continue work on the implementation of these laws and regulations.
In FY 2001, USAID plans to provide $1 million in DA and $3.2 million in ESF to fund activities to foster a more conducive legal and regulatory environment. Under a new economic law project, USAID will provide advisors and training for legislative drafting and case management in areas such as capital markets, secured transactions, company law, cyber law, and anti-corruption.
To strengthen public participation in economic decision-making, USAID assists with policy reforms in partnership with national and local governments, parliaments, and universities through policy workshops, media campaigns, and policy dialogue sessions. In collaboration with the University of Maryland and the economic research institute of the University of Indonesia, USAID has established a network involving twenty-three universities throughout the country to provide training, workshops and research activities. A cadre of local experts is being developed that can help national and local government institutions better understand critical economic issues.
In FY 2001, USAID plans to provide $1 million in DA and $2.7 million in ESF to enhance knowledgeable public participation in economic decision-making. Activities will include regional economic development programs, training and linkages with regional universities.
In collaboration with the Bank Rakyat Indonesia, USAID supports economic recovery and growth through microlending, particularly for low?income families throughout Indonesia. Over 2.6 million people have received loans to date. USAID funds the Asia Foundation, which assists an active network of small and medium enterprise owners in fourteen of Indonesia's provinces. These groups have successfully advocated for improved licensing procedures, raised awareness about competition policy, and brought attention to burdensome requirements affecting agricultural processing.
In FY 2001, USAID plans to provide $619,000 in DA and $2.3 million in ESF to fund improved access to economic opportunity. USAID will help improve microfinance policies and institutions to foster the growth of micro and small enterprises.
In FY 2001, USAID plans to transfer to the Department of State $1.2 million ESF (including $600,000 in FY 2000 carryover funds) for the Fulbright Scholarship program. USAID also plans to transfer to the Department of State $300,000 in FY 2001 ESF funds for the legislative leadership program.
Possible Adjustments to Plans: Indonesia's economic recovery and growth depend heavily on the external economic environment and on the domestic political and security situation. Changes in the security situation, a decrease in political will to support the required economic reforms, or an interruption in multilateral lending may warrant adjustments to the program.
Other Donor Programs: USAID works closely with other donors, primarily with the World Bank, Asian Development Bank, and the International Monetary Fund, in supporting macroeconomic stability, financial sector reform, and trade policy initiatives. While the international financial institutions have taken the lead in budget support, USAID's comparative advantage is in providing technical assistance and working with non?governmental organizations. USAID plays an essential role in identifying and shaping needed policy reforms, helping Indonesia fulfill policy commitments, fostering citizen participation in economic decision-making, and monitoring economic progress.
Principal Contractors, Grantees, or Agencies: The Barents Group is responsible for technical assistance to the Ministry of Finance and bank restructuring. The Nathan/Checchi consortium provides technical assistance to the Bank Indonesia, the Ministry of Industry and Trade, and Bappenas. Major grantees include the Asia Foundation and the Universities of Maryland, San Francisco, Columbia, Georgetown, South Carolina, and Southern California.
* Previously reported as "Recovery of Economic and Financial Systems."
FY 2002 Performance Table
Indonesia: 497-011
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: Cumulative Assets sold under Indonesian Bank Restructuring Agency (IBRA) NA NA 13,1 33,8 28 51 81 Indicator 2: Cumulative key enactments of laws, regulations, decrees, and rules NA NA 4 11 10 16 26 Indicator 3: Annual US dollar value of Indonesia's non oil and gas International Trade NA NA 59 75 77 80 85 Indicator 4: Number of outstanding loans by Bank Rakyat Indonesia (BRI) village units NA NA 2.520 2.650 2.600 2.650 2.725 Indicator 5: Cumulative number of substantial policy engagements with government or parliament NA NA 389 1279 600 850 1100 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR Trillion Rupiah Indonesian Bank Restructuring Agency (IBRA) Cumulative value of assets sold under IBRA Indicator 2: IR Number Partnership for Economic Growth (PEG). Cumulative count of satisfactory, significant enactments, i.e. laws, regulations, decrees, rules passed or modified in selected areas and on which USAID and/or USAID partners where substantially involved. Indicator 3: S US $ billion Central Board of Statistics Indonesia Sum of US dollar value of Indonesia's non-oil and gas exports and imports Indicator 4: IR Number (in thousands of borrowers) Bank Rakyat Indonesia (BRI). Number of outstanding loans by BRI village units at the end of the calendar year. Beginning in 2002, the number of outstanding loans will be disaggregated by gender Indicator 5: IR Number Partnership for Economic Growth (PEG). "Substantial Policy Engagements" is defined as the number of the following: 1) policy workshops held with appropriate participants; 2) media campaigns; 3) policy dialogue session held with government or parliament on chosen policy issues. U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 128,499 DA 113,851 DA 14,648 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 6,850 DA 12,863 DA 0 CSD 0 CSD 10,048 ESF 0 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 0 DFA Through September 30, 2000 135,349 DA 126,714 DA 8,635 DA 0 CSD 0 CSD 0 CSD 10,048 ESF 0 ESF 10,048 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 5,619 DA 0 CSD 15,000 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 5,619 DA 0 CSD 15,000 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 5,623 DA 16,152 DA 162,743 DA 0 CSD 0 CSD 0 CSD 18,500 ESF 24,000 ESF 67,548 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 0 DFA
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Last Updated on: May 29, 2002 |
