[Federal Register Volume 88, Number 77 (Friday, April 21, 2023)]
[Notices]
[Pages 24638-24640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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: https://www.mcc.gov/content/uploads/compact-indonesia-infrastructure-and-finance.pdf.

(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:
     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.
     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.
     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.
     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:
     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.
     Transaction Advisory Services Activity: This activity will 
provide transaction advisory services to originate approximately 10 
proof-of-concept demonstration transactions.
     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:
     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.
     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.
     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.
     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
                                                        ----------------
    Total MCC Funding..................................      649,000,000
    Government of Indonesia Contribution...............       48,675,000
                                                        ----------------
    Total Compact......................................      697,675,000
------------------------------------------------------------------------
\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