United States Launches US$649m Development Grant for Indonesia

TEMPO.CO, Jakarta - The United States (US) on September 4, 2024, launched the Indonesia Infrastructure and Finance Compact worth US$649 million. The five-year grant between the Millennium Challenge Corporation (MCC) USAID and Indonesia is expected to double US development assistance to Indonesia over the next five years. It will also augment USAID's development assistance of around US$130 million annually.

"The focus of this compact — blended finance for public infrastructure, and access to finance for women-owned small businesses — is a testament to the ingenuity and sophistication of the U.S.-Indonesia partnership," said US Ambassador to Indonesia, Kamala S. Lakhdhir.

According to the ambassador, Indonesia needs trillions of dollars in investment in clean and sustainable infrastructure to support its rapidly growing economy. Thus, mobilizing private capital through blended financing is necessary.

"MSMEs are the backbone of Indonesia's rapidly growing economy, and the vast majority are owned by women. Better access to finance will help them grow their small businesses," said Lakhdhir.

Also present at the launch were MCC’s Vice President of Compact Operations, Cameron Alford; Indonesia’s Deputy Minister of Finance, Thomas Djiwandono; Bappenas Secretary Teni Widuriyanti; and Maurin Sitorus, Executive Director of MCA-Indonesia II, who will implement the Compact’s programs on behalf of the Government of Indonesia.

The MCC Compact, which includes a US$49 million co-investment from Indonesia in addition to the MCC grant, will help the Indonesian government improve access to infrastructure financing—particularly transport and logistics infrastructure—and support for women-owned MSMEs.

The project, developed in close coordination with Indonesia, is expected to further US efforts to build climate-resilient transportation infrastructure and support Indonesia’s development goals while contributing to the objectives of the Partnership for Global Infrastructure and Investment.

“It’s about helping people lead more prosperous lives and growing Indonesia’s economy, in partnership with the United States. We have lots of work to do. Today, we celebrate. Tomorrow, and for the next five years, we work,” Ambassador Lakhdhir said

On the 75th anniversary of diplomatic relations, the United States and Indonesia continue to deepen political, economic, and security cooperation and expand their partnership to address emerging challenges. The initiation marks another important step in advancing bilateral relations that benefit Indonesian citizens and Americans alike.

TEMPO.CO

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