WASHINGTON – U.S. Secretary of the Treasury Janet Yellen and Indonesian Minister of Finance Sri Mulyani Indrawati signed the IDR 10.2 trillion ($698 million) Indonesia Infrastructure and Finance Compact – a five-year compact between the U.S. government’s Millennium Challenge Corporation (MCC) and the Government of Indonesia, with contributions of IDR 9.5 trillion ($649 million) from the United States and IDR 718 billion ($49 million) from the Government of Indonesia.
WATERLOO – The Indonesia Infrastructure and Finance Compact, worth IDR 10.2 trillion ($698 million), was signed by U.S. Treasury Secretary Janet Yellen and Indonesian Minister of Finance Sri Mulyani Indrawati. It is a five-year agreement between the U.S. government’s Millennium Challenge Corporation (MCC) and the Government of Indonesia, with contributions totaling IDR 9.5 trillion ($649 million) from the United States and IDR 718 billion ($49 million) from the latter.
Secretary Yellen, who serves as vice chair of the MCC Board of Directors, stated that this relationship “represents the shared belief of the United States and Indonesia in democracy and innovation-driven economic growth.” The agreement will help Indonesia’s Just Energy Transition Partnership as well as the creation of climate-resilient infrastructure that complies with the requirements of the Partnership for Global Infrastructure and Investment (PGII), which was jointly announced by our presidents at the G20 Leaders’ Summit.
Nearly 97 percent of Indonesia’s workforce is employed by the country’s micro, small, and medium-sized businesses (MSMEs), which also account for about 57 percent of the GDP. To transport employees and goods, the nation needs high-quality infrastructure as it continues to expand in manufacturing and commodity-based exports.
CEO Albright stated, “MCC is proud of our close to 20-year relationship with the Government of Indonesia.” We will have collaborated on initiatives totaling more than $1 billion after this investment. The agreement announced today will put a special emphasis on sustainability and scalability, enhancing the nation’s resilience to climate change and other external shocks while expanding business owners’ options to access market finance.
The Indonesia Infrastructure and Finance Compact intends to increase the country’s MSMEs’ access to financing, particularly for those MSMEs owned by women.
Minister Mulyani continued, “Indonesia is taking crucial steps to create a stable financial environment, promoting economic growth that benefits everyone.” I’m eager to see how our combined efforts will further the economic security of Indonesians in both the present and the future.
Three projects are included in the Indonesia Infrastructure and Finance Compact:
At the sub-national level, where transport and logistics are more limited, the Advancing Transport and Logistics Accessibility (ATLAS) Project will collaborate with the governments of South Sumatra, North Sulawesi, Riau, the Riau Islands, and Bali to improve infrastructure planning and preparation. The initiatives that arise will increase Indonesians’ access to employment possibilities and the accessibility of transport services for women and people with disabilities.
The Access to Finance for Women-owned/Micro-, Small and Medium Enterprises Project seeks to expand official lending services to MSMEs, particularly those owned by women. Additionally, the initiative will offer technical support to increase credit worthiness and investment preparedness as well as business training, including lessons in digital and financial literacy.
To improve the contribution of private sector or commercially oriented finance to infrastructure initiatives, the Financial Markets Development (FMD) Project will offer grants for blended finance and technical assistance. This would make it easier for the Indonesian government to establish new alliances and release restricted funds to finance high-quality, low-risk infrastructure projects.
For the first time, MCC and the Indonesian government collaborated in 2006 on a $55 million threshold programme to lower corruption and increase immunisation rates. Through the $474 million MCC-Indonesia Compact programme, which prioritises sustainable land and energy management, modernised public procurement, and health and nutrition, MCC and the Indonesian government teamed once more in 2011.
The Millennium Challenge Corporation is an independent U.S. government agency working to reduce global poverty through economic growth. Created in 2004, MCC provides time-limited grants and assistance to countries that meet rigorous standards for good governance, fighting corruption and respecting democratic rights.