T

he United States Millennium Challenge Corporation (MCC) has expressed intentions to grant US$600 million to support Indonesia in its efforts to increase household income and sustain economic growth through reduced energy costs, increased productivity and improved public expenditure.

US Secretary of State Hillary Clinton, who also chairs the MCC board, said the five-year program will cover three projects — a green prosperity project, a community-based health and nutrition project and a procurement modernization project — which “reflect our shared values and Indonesia’s priorities”.

Indonesia’s economic growth has been relatively rapid and resilient, despite external issues, growing at over 6 percent during the past two years. Poverty, however, remains prevalent, with beggars easily found on the streets of the nation’s capital of Jakarta and throughout other large Indonesian cities.

As of March this year, the number of low-income citizens reached 30.02 million, representing 12.49 percent of Indonesia’s population of 240 million people.

The $332 million green prosperity project is expected to increase productivity and reduce reliance on fossil fuels by improving land use practices and management of natural resources.

“We think that rural people will be able to raise their income while reducing their reliance on fossil fuels and on logging. It will also compliment Indonesia’s efforts to meet its international commitment to reducing projected greenhouse gas emission from 26 to 41 percent by 2020,” Clinton said before signing the grant agreement with Indonesian Finance Minister Agus Martowardojo in Nusa Dua, Bali.

One in seven villages in Indonesia does not have access to reliable and affordable electricity and many more rely on expensive and sub-standard diesel power generation.

The $131.5 million community-based health and nutrition program – the MMC’s first ever – will target approximately 2.9 million children in 7,000 villages in provinces where the rate of low birth weights and stunted growth in infants and young children between two and five years old are especially high.

One-third of children under the age of five in Indonesia currently show symptoms of stunted growth, which stems from nutritional deprivation and is responsible for higher infant and child mortality, as well as increased susceptibility to infection and illness, reduced adult physical stature and impaired cognitive abilities.

The last program for the public sector, the $50 million procurement modernization project aims “to reform and improve the government’s system for making purchases on behalf of the people – everything from office supplies to maintenance contracts”, Clinton said.

“This proposal has the potential to save as much as $15 billion annually for the government of Indonesia,” she added.

In 2011 alone, the equivalent of over $15 billion might have been misused due to corrupt and inept procurement practices, a recent Corruption Eradication Commission (KPK) study reported.

The remaining $75.8 million funds would be used for administrative and oversight costs and $10.2 million for monitoring and project evaluation.

Minister Agus said there would be a surveillance organization to make sure that implementation of the grant would be “in accordance with good governance”.

“The fund would be managed by a trust that would consist of representatives from the government, non-government organizations and the MCC. The number one priority is governance,” Agus told reporters after the signing ceremony.

“Two weeks from now, there will be an official kick-off to ensure that the system is in place.”