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Indonesia
>> Regional Overview >> Indonesia Overview Program Data Sheet
497-011
USAID MISSION: Indonesia
PROGRAM TITLE: Promoting Economic Growth (Pillar: Economic Growth, Agriculture, and Trade)
STRATEGIC OBJECTIVE AND NUMBER: Foundation Set for Rapid, Sustainable, and Equitable Economic Growth, 497-011
STATUS: Continuing
PLANNED FY 2002 OBLIGATION AND FUNDING SOURCE: $5,123,000 DA; $14,000,000 ESF
PROPOSED FY 2003 OBLIGATION AND FUNDING SOURCE: $5,123,000 DA; $18,000,000 ESF
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2004Summary: This program is helping accelerate Indonesia's economic recovery and strengthen the capacity of key institutions and policy-makers to undertake economic reforms necessary for long-term equitable growth. Major program components technical assistance, training, and grant assistance to-
- strengthen key economic and financial institutions and encourage sound polices;
- create a market-oriented legal and regulatory environment;
- foster small and medium enterprises (SMEs) and microenterprises through credit, supportive policies, and business services;
- reform and assist parliaments, local governments, professional associations, media and the public to participate in decision making.
Inputs, Outputs, and Activities: FY 2002 Program: USAID will use FY 2002 funding for technical assistance and training in economic policy assistance, focusing on immediate issues related to fiscal sustainability, monetary and exchange rate policy, debt management, agriculture, trade and investment reforms, and establishing a sound institutional framework. Key institutional beneficiaries include Bank Indonesia, the National Development Planning Board, the Indonesian Bank Restructuring Agency (IBRA) (bank asset sales), the Jakarta Initiative Task Force (JITF) (corporate debt restructuring), the Ministry of Finance (budget and tax) and the Ministry of Trade and Industry (WTO, domestic and international trade issues). USAID will work with business associations and NGOs to open access for opportunities for SME and microenterprises. To encourage knowledgeable public participation, USAID will work with universities to reach out and help local governments and media through policy workshops, media campaigns, and objective analysis on critical reform agenda items. FY 2002 activities will also include accelerating corporate and bank debt restructuring through the JITF and IBRA, resolution of the fiscal policy issues related to decentralization, and supporting GOI efforts to advance priority legislative reforms such as money laundering, bank secrecy, anticorruption, competition, and corporate governance.
Planned FY 2003 Program: USAID plans to continue the above activities with increased attention on technical assistance and training for longer-term institution building and capacity development, regional issues, agriculture, and privatization.
USAID technical assistance to the Jakarta Initiative Task Force (JITF) contributed significantly to the restructuring of $12.2 billion in corporate debt. Performance and Results: USAID assistance contributed significantly to meeting IMF targets for asset recovery and corporate debt restructuring in 2001. The Indonesia Bank Restructuring Agency (IBRA) contributed $2.8 billion to the state budget, moved to a "fair market value" concept, improved planning, increased sales of un-restructured debts, and enhanced oversight functions to accelerate the final approval of deals. USAID is helping maintain momentum for trade policy reforms, despite political pressure to reverse the process. Tariffs have been reduced by nearly 50% over the past six years and most nontariff barriers have been eliminated. With USAID encouragement, Bank Indonesia adopted a market-friendly small credit promotion policy and abandoned lending quotas, as required by the IMF Letter of Intent. Careful analysis of rice production in five regions of Indonesia led the GOI to accept the impact of rice price on poverty and the need to revise rice policy.
USAID helped with the drafting, passage and implementation of key economic reform laws. Assistance in drafting the Warehouse Receipts Law, which is crucial to the operation of the Commodities Exchange, will allow farmers to receive higher prices. The Companies Law currently under revision will help open Indonesia's market and attract foreign investment. Implementing regulations now being drafted for the Secured Transactions Law will lower the cost of credit and allow more efficient use of resources.
USAID microlending programs, targeting low-income families, have generated 2.8 million commercial term loans since 1995 with over 98% repayment. In the under-developed province of Papua, over 3,100 small business owners were assisted. A network of SME owners advocated reforms in the provinces of South Sulawesi, Central Java, West Kalimantan, and North Sumatra, and increased awareness of the burdensome procedures faced by SME exporters, such as the furniture industry, and the impact of decentralization on SMEs.
Close working ties were established with 20 regional universities. More than 20 influential reports, draft laws, and draft regulations were provided to local governments and parliaments. Training centers at three regional universities helped to improve the quality of legislative drafting and analysis by local parliamentarians and their staff, university faculty, and government officials.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented by Nathan-Checchi; Development Alternatives; Boston Institute for Developing Economies (sub); Barents Group; the U.S. Department of Treasury; The Asia Foundation; the Universities of Maryland, Georgia State, San Francisco, Columbia, Georgetown, South Carolina, Southern California, SUNY-Albany (sub), and Kentucky (sub); Financial Sector Volunteer Corps; Rand Corporation; Rural Development Institute; Opportunity International; and CARE. USAID works closely with key Government economic ministries, the University of Indonesia, and Gadjah Mada University.
US Financing in Thousands of Dollars
497-011 Foundation Set for Rapid, Sustainable, and Equitable Economic Growth DA ESF Through September 30, 2000 Obligations 135,349 10,048 Expenditures 126,714 0 Unliquidated 8,635 10,048 Fiscal Year 2001 Obligations 5,623 12,577 Expenditures 1,727 4,028 Through September 30, 2001 Obligations 140,972 22,625 Expenditures 128,441 4,028 Unliquidated 12,531 18,597 Prior Year Unobligated Funds Obligations 0 0 Planned Fiscal Year 2002 NOA Obligations 5,123 14,000 Total Planned Fiscal Year 2002 Obligations 5,123 14,000 Proposed Fiscal Year 2003 NOA Obligations 5,123 18,000 Future Obligations 0 0 Est. Total Cost 151,218 54,625
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Last Updated on: May 29, 2002 |
