Notice of Entering Into a Compact With the Republic of Indonesia, 73691-73719 [2011-30706]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 76, Number 229 (Tuesday, November 29, 2011)]
[Notices]
[Pages 73691-73719]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30706]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 11-12]


Notice of Entering Into a Compact With the Republic of Indonesia

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation (MCC) is publishing a summary and the complete 
text of the Millennium Challenge Compact between the United States of 
America, acting through the Millennium Challenge Corporation, and the 
Republic of Indonesia. Representatives of the United States Government 
and the Republic of Indonesia executed the Compact documents on 
November 19, 2011.

    Dated: November 23, 2011.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Summary of Millennium Challenge Compact With the Republic of Indonesia

    The five-year, $600 million compact with the Government of 
Indonesia (the ``GOI'') is aimed at reducing poverty through economic 
growth (the ``Compact''). To this end, the Compact's three projects are 
intended to increase incomes of households in project areas through 
increased productivity of labor and enterprises, reduced household 
energy costs, and improved provision of growth-enhancing goods and 
services by the public sector.

1. Project Overview and Activity Descriptions

    To advance the Compact goal of reducing poverty through economic 
growth, the Compact will fund three projects. The Green Prosperity 
Project aims to (i) increase productivity and reduce reliance on fossil 
fuels by expanding renewable energy; and (ii) increase productivity by 
improving land use practices and management of natural resources. These 
objectives are consistent with GOI development plans to support low 
carbon economic development and the protection of natural capital 
leading to increased household incomes in project areas. The Community-
Based Health and Nutrition to Reduce Stunting Project aims to reduce 
and prevent low birth weight, childhood stunting, and

[[Page 73692]]

malnourishment of children in project areas, and thereby increase 
household incomes through cost savings, increases in productivity, and 
higher lifetime earnings. Finally, the Procurement Modernization 
Project aims to (i) achieve significant government expenditure savings 
on procured goods and services; and (ii) improve the delivery of public 
services through expenditure of planned budgets.
Green Prosperity (GP) Project
    The majority of Indonesia's poor live in rural areas that are rich 
in natural resources, but the over-extraction and inadequate management 
of these resources threaten Indonesia's ability to sustain high rates 
of economic growth and reduce poverty. It is estimated that over 10,000 
villages in Indonesia (13 percent) do not have access to reliable and 
affordable electricity, and many more rely on expensive and dirty 
diesel generation. Illegal logging, conversion of marginal lands for 
agriculture, water pollution, and other unsustainable land use 
practices are adversely affecting the natural assets that people rely 
on for their livelihoods and wellbeing. The lack of clear data on land 
resource use and jurisdictional boundaries between villages and 
districts significantly hinders GOI agencies and land use planners from 
managing critical natural resources effectively. Ultimately, protecting 
Indonesia's natural resource base in the face of demographic, social, 
and economic forces requires sustainable and equitable economic 
alternatives.
    Indonesia is among the world's top emitters of greenhouse gases. 
The majority of these greenhouse gas emissions result from 
deforestation and land use conversion; however, emissions from energy 
and industrial sources are growing rapidly. The GOI is committed to a 
more sustainable future, having set a target of reducing greenhouse gas 
emissions by 26 percent by 2020, while maintaining a target of seven 
percent annual economic growth. Increasing access to clean and reliable 
energy in rural areas and improving the stewardship of natural assets 
are critical priorities to achieving this goal.
    The GP Project will promote high levels of environmentally 
sustainable, growth as set forth in the GOI's medium to long-term 
development plans. The project will provide a combination of technical 
and financial assistance to support rural economic development that 
raises household incomes of Indonesians in a manner that reduces 
reliance on fossil fuels, improves land management practices, protects 
natural capital, and complements efforts to reduce emissions from 
deforestation and environmental degradation. The GP Project will 
involve local communities and governments in activities to improve the 
clarity and implementation of government policies and regulations.
    The centerpiece of the GP Project is a funding facility that will 
support investments in two areas: (i) Expansion of renewable energy; 
and (ii) sustainable management and use of natural resources (the ``GP 
Facility''). These investments will enhance economic growth, reduce 
Indonesia's carbon footprint, and help align incentives and practices 
to foster improved environmental stewardship at the local level.
    MCC and the GOI will start the GP Project in the provinces of Jambi 
and West Sulawesi. Based on program experience in the two start-up 
provinces, other eligible provinces will be added by mutual agreement. 
Districts will be selected based on a range of geographic, economic, 
environmental, and social indicators, including poverty levels, 
renewable energy potential, economic growth potential, governance, 
forest cover, and peat lands under threat of degradation or 
destruction. Districts must have government-approved spatial plans in 
place and agree to make land use information and licensing processes 
transparent and accessible.
    Key implementing partners and project sponsors are expected to 
include local governments and institutions; private enterprises in the 
agriculture, forestry, water and energy sectors; financial 
institutions; small-holder farmers; and local and international civil 
society organizations. GP Project activities include:
     Participatory Land Use Planning Activity: The purpose of 
this activity is to ensure that projects funded by the GP Facility are 
designed on the basis of accurate spatial and land use data, and adhere 
to and reinforce existing national laws, regulations, and plans. This 
activity also will help strengthen the capacity of local communities 
and district level institutions to manage their own land and resources. 
MCC funding will support: (i) Administrative boundary setting; and (ii) 
updating and integrating inventories of land and other natural resource 
use licenses and other relevant data.
     Technical Assistance and Oversight Activity: Technical 
assistance will be provided to district governments, project sponsors, 
community groups, and financial institutions to assist with the 
preparation of low carbon development work plans, project 
identification and design, preparation of business plans and funding 
applications, and capacity building, where necessary. The purpose of 
this activity is to develop a pipeline of projects for the GP Facility, 
while facilitating significant stakeholder consultations at the local 
level.
     GP Facility Activity: The GP Facility will finance 
projects in the renewable energy and natural resources management 
sectors. One or more independent facility managers acceptable to MCC 
will implement the GP Facility.
    The GP Facility will contain at least two funding windows: (i) A 
window to finance commercial scale renewable energy investments 
reflecting the priority of the GP Project and private sector 
investments in natural resource management; and (ii) a grants window to 
support community-based, small scale renewable energy and other 
projects to promote sustainable natural resource management and improve 
land use practices.
    The GOI will develop a comprehensive operations manual(s), subject 
to MCC approval, that governs operations of the GP Facility. The 
operations manual(s) will include detailed investment criteria and 
outline monitoring and reporting procedures to ensure that investment 
objectives are being achieved, and to verify compliance with other 
relevant criteria, including environmental and social safeguard 
requirements.
    Proposals will be reviewed and recommended for approval in 
accordance with the operations manual. The operations manual will 
contain minimum project eligibility criteria reflecting: (i) A minimum 
economic rate of return (``ERR'') as defined by the MCC hurdle rate; 
(ii) a core objective of improving environmental stewardship; (iii) 
contribution (directly or indirectly) to the reduction of greenhouse 
gas emissions; (iv) equal access for women and other vulnerable groups 
to the project or its benefits; and (v) for commercially viable 
projects, suitable risk allocations to the parties.
     Green Knowledge Activity: The objective of this activity 
is to build local, provincial, and national capacity to advance 
Indonesia's low carbon development strategy nationwide within the 
context of the GP Project. Specifically, MCC funding will support:
    [cir] Capacity building for local and provincial stakeholders to 
stimulate a shift toward low carbon development policies in local and 
provincial governments, and to support the sustainability of MCC's 
investment in the GP Project; and
    [cir] Development and improvement of centers of excellence at 
selected

[[Page 73693]]

Indonesian universities in science and technology related to low carbon 
development with an emphasis on renewable energy and closely related 
areas of natural resource management.
Community-Based Health and Nutrition to Reduce Stunting Project
    Currently, 35.6 percent of children under 2 years old in Indonesia 
are severely stunted, as measured by international standards.\1\ The 
consequences of the cumulative nutritional deprivation in a child's 
early life include higher infant and child mortality, increased 
susceptibility to infection and illness, reduced adult physical 
stature, and impaired cognitive abilities, all of which result in long-
term economic loss.
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    \1\ Low height for age (as measured by two standard deviations 
below height for age).
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    The purpose of the Community-Based Health and Nutrition to Reduce 
Stunting Project is to reduce stunting and low birth weight in infants 
and children 0-2 years old in selected provinces. The project proposes 
an incentives-based scheme that facilitates community demand for tools 
to reduce stunting and improves the supply response and capacities of 
the Ministry of Health at the district and subdistrict levels.
    This project builds on existing community engagement mechanisms 
already tested under a Ministry of Home Affairs community-driven 
development program pilot, Generasi, implemented with assistance from 
the national community empowerment program support trust fund (PSF) 
managed by the World Bank. Generasi successfully supported community 
efforts to improve targeted health, nutrition, and education 
indicators. With MCC support, the GOI will revise the program to obtain 
stronger nutrition and stunting outcomes. The ``Generasi Plus'' 
approach reinforces the community incentives system originally piloted 
under the Generasi program, and adds provider incentives to ensure that 
the supply of health services will meet communities' demand. Project 
activities include:
     Community Projects Activity: MCC funding will be used by 
the PSF to finance block grants, participatory planning, and technical 
assistance to communities. To receive funding, villages participating 
in Generasi commit to improving 12 basic health and education 
indicators. Under Generasi Plus, stunting indicators (including a 
measure of children's height for age) will be added to the existing 12 
indicators. Facilitators, trained specifically in nutrition and 
stunting interventions, will work with local health and sanitation 
service providers to assist villagers in a participatory planning 
process to help identify problems and find local solutions to be funded 
using the block grant. In order to focus communities on the most 
beneficial interventions, the GOI will base the size of the villages' 
Generasi Plus block grant for the subsequent year partly on their 
performance on each of the targeted health and education indicators.
     Supply-Side Interventions Activity: MCC funding will be 
used by the PSF (or other mechanism acceptable to MCC) to support: (i) 
the creation of an enhanced training program for all health and 
sanitation service providers in the designated project areas to 
encourage a focus on stunting reduction and related interventions; and 
(ii) testing various types of incentives to service providers based on 
their service delivery performance. MCC funding will also be used for 
grants to stimulate market-based responses to identified demand for 
nutrition and sanitation interventions.
     Communications, Project Management, and Evaluation 
Activity: MCC funding will be used by the PSF to support development 
and implementation of a national stunting awareness campaign with a 
focus on healthy families that emphasizes shared decision making 
between women and men within the household.
Procurement Modernization Project
    Efficient and effective public procurement is a strategic public 
sector function and a fundamental component of good governance. 
Indonesia's existing public procurement systems are highly vulnerable 
to fraud, waste, and abuse resulting in significant loss of funds and 
diminished quality of services, with some studies estimating that the 
equivalent of over $15 billion could be lost to corrupt and inept 
procurement practices in 2011 alone. Indonesia has issued two 
presidential regulations to modernize its public procurement system. 
These presidential regulations require the formation of Procurement 
Service Units (PSUs) at the national and local levels to serve as 
permanent, independent units where procurement professionals will 
provide a centralized procurement service. While approximately 150 PSUs 
have been established, most do not meet the requirements of a 
modernized procurement function and questions remain about how to 
organize and define the roles and responsibilities of the PSUs in local 
and national government. The National Public Procurement Policy Agency 
(LKPP) is eager to implement these modernization efforts and to promote 
international best practices in public procurement. Project activities 
include:
     Procurement Professionalization Activity: The next steps 
in the procurement reform agenda for Indonesia are to: (i) Build a 
professional procurement workforce; (ii) create an institutionalized 
role and structure that provides sufficient authority to implement good 
practice; and (iii) provide a career path to incentivize adherence to 
best practices, while strengthening controls such as procurement and 
financial audits, which are needed to ensure improved institutional 
performance. To this end, the Procurement Modernization Project will 
implement the following mutually reinforcing subactivities:
    [cir] Institutional Structure and Professionalization of PSUs to 
support PSUs at the various levels of government by: (i) determining 
standard staffing needs and strengthening operational modalities of 
PSUs; (ii) supporting LKPP's human resource development strategy by 
establishing a curriculum and recognizing training institutes through 
LKPP's accreditation process; and (iii) supporting development of 
training modules for GOI's auditors (inspectors general) to conduct 
compliance and performance audits of the procurement system.
    [cir] Procurement Management Information System to support: (i) 
development of an information technology system to create a data 
warehouse to maintain complete records of procurement activity; (ii) 
testing of a procurement management information system module at pilot 
sites; (iii) establishment of a catalog purchasing system (commonly 
known as an e-catalog system) to ease the administrative burden and 
transaction costs related to purchasing routine commercial products and 
services; and (iv) the development of the procurement procedures and 
standard bidding documents for framework contracting.
    This activity will be implemented in two phases. Phase one will 
pilot the program to test the core elements of the reform program 
across a variety of institutional settings in Indonesia to ensure that 
procurement reform generates the intended results. During phase one, up 
to 30 PSUs will be provided with assistance to build the capability of 
and provide professional credentials to the procurement workforce, and 
to institute improved procurement practices. If certain

[[Page 73694]]

conditions are met,\2\ the successful models developed in phase one 
would then be rolled out to a larger set of existing or newly created 
PSUs under phase two, with a target to create a workforce of 500 
procurement professionals working in permanent, full-time positions in 
established PSUs. It is estimated that this would provide permanent 
staffing for at least 100 PSUs.
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    \2\ Conditions include: (i) Conclusion of an assessment of phase 
one; (ii) achievement of agreed legal and policy changes; (iii) 
agreement regarding the final design of phase two; and (iv) 
demonstration that the projected ERR is at or above 10 percent for 
phase two.
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     Policy and Procedure Development Activity: This activity 
consists of the following two subactivities that, together, address 
major gaps in the procedural framework and operation of the procurement 
system in Indonesia.
    [cir] Competitive Tendering for Public Private Partnerships (PPPs) 
to support: (i) preparation of guidelines and standard bidding 
documents for competitive tendering of PPP projects and development of 
a toolkit with templates and model documents for procurement planning 
and project preparation; (ii) a pilot program to assist trained 
procurement officials to conduct a PPP infrastructure project in at 
least one line ministry or subnational administration; and (iii) 
implementation of recommended adjustments to the e-procurement system 
and a PPP project management system.
    [cir] Procedures for Sustainable Procurement to support the 
development of processes and procedures to meet the GOI's commitment to 
purchasing environmentally-friendly goods and services. Developing the 
sustainable procurement framework will be implemented in three stages--
discovery, establishment, and implementation--leading to a pilot 
program. MCC and the GOI will evaluate this subactivity's performance 
at the end of each stage and will move forward with the next stage only 
upon mutual consent.

2. Compact Budget

------------------------------------------------------------------------
                 Projects and activities                  Millions (US$)
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Green Prosperity Project................................           332.5
(A) Participatory Land Use Planning Activity............            25.0
(B) Technical Assistance and Oversight Activity.........            50.0
(C) Green Prosperity Facility Activity..................           242.5
(D) Green Knowledge Activity............................            15.0
Community-Based Nutrition Project.......................           131.5
(A) Community Projects Activity.........................            81.6
(B) Supply-Side Activity................................            36.0
(C) Communications, Project Management and Evaluations              13.9
 Activity...............................................
Procurement Modernization Project.......................            50.0
(A) Procurement Professionalization Activity............            46.4
(B) Policy and Procedure Activity.......................             3.6
Monitoring and Evaluation...............................            10.2
Program Administration and Control......................            75.8
Program Administration..................................            70.8
Targeted Gender Activities..............................             5.0
                                                         ---------------
    Total Compact Budget................................           600.0
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3. Administration

    The Compact also includes program administration costs estimated at 
$70.8 million over a five-year timeframe, including the costs of 
administration, management, auditing, and fiscal and procurement 
services. In addition, the cost of monitoring and evaluation of the 
Compact and integration of MCC's gender policy is budgeted at 
approximately $15.2 million.

4. Benefits and Beneficiaries

    The Green Prosperity Project is expected to benefit households and 
businesses in targeted districts, primarily through expanded access to 
renewable energy and improved natural resource management. Improved 
land use practices may also indirectly benefit other public and private 
stakeholders downstream or adjacent to Green Prosperity Project 
provinces or districts. The Green Knowledge Activity is expected to 
benefit businesses and households at the national level. Economic rates 
of return are not currently estimated for this project because the 
future impact of subprojects will not be known until the investment 
facility is established and specific projects are identified, 
developed, and assessed. However, activities funded under the Green 
Prosperity Facility, will be required to have an ERR above 10 percent 
(MCC's hurdle rate). A subset of monitoring and evaluation indicators 
and targets for the Green Prosperity Project will be formulated as a 
condition to entry into force of the Compact.
    The Community-Based Nutrition Project is expected to benefit up to 
2.9 million children and their families in up to 7,000 villages by 
enhancing their human capital and lifetime income and reducing health 
costs in several provinces.\3\ The preliminary estimated ERR on this 
project is 13 percent. ERR calculations are an estimate, using the best 
information available at the time. This figure represents a potential 
range of outcomes that account for the uncertainty of core parameters.
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    \3\ West Java, East Java, Nusa Tenggara Timur, Nusa Tenggara 
Barat, Gorontalo, and West Sulawesi.
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    The Procurement Modernization Project is expected to support 
improved performance of up to 100 Procurement Service Units that are 
being established in local and central governments. Beneficiaries of 
this project will be residents and businesses located in and with 
economic relationships in the targeted districts, in addition to those 
benefitting from the public goods and services procured by 
participating national level ministries. Due to this project's 
groundbreaking nature, comparative data do not yet exist to calculate 
an ERR to quantify the benefits of the project. However, as outlined in 
the project description above, the project is structured in two phases. 
Phase one will help quantify the benefits and, in order to proceed with 
phase two, the Compact will require that planned activities have an ERR 
above 10 percent. A subset of monitoring and evaluation indicators and 
targets for the Procurement

[[Page 73695]]

Modernization Project will be formulated as a condition to entry into 
force of the Compact.

Millennium Challenge Compact Between the United States of America 
Acting Through the Millennium Challenge Corporation and the Republic Of 
Indonesia

Millennium Challenge Compact

Table of Contents

Article 1. Goal and Objectives
Section 1.1 Compact Goal
Section 1.2 Project Objectives
Article 2. Funding and Resources
    Section 2.1 Program Funding
    Section 2.2 Compact Implementation Funding
    Section 2.3 MCC Funding
    Section 2.4 Disbursement
    Section 2.5 Interest
    Section 2.6 Government Resources; Budget
    Section 2.7 Limitations of the Use of MCC Funding
    Section 2.8 Taxes
Article 3. Implementation
    Section 3.1 Program Implementation Agreement
    Section 3.2 Government Responsibilities
    Section 3.3 Policy Performance
    Section 3.4 Accuracy of Information
    Section 3.5 Implementation Letters
    Section 3.6 Procurement and Grants
    Section 3.7 Records; Accounting; Covered Providers; Access
    Section 3.8 Audits; Reviews
Article 4. Communications
    Section 4.1 Communications
    Section 4.2 Representatives
    Section 4.3 Signatures
Article 5. Termination; Suspension; Expiration
    Section 5.1 Termination; Suspension
    Section 5.2 Consequences of Termination, Suspension or 
Expiration
    Section 5.3 Refunds; Violation
    Section 5.4 Survival
Article 6. Compact Annexes; Amendments; Governing Law
    Section 6.1 Annexes
    Section 6.2 Amendments
    Section 6.3 Inconsistencies
    Section 6.4 Governing Law
    Section 6.5 Additional Instruments
    Section 6.6 References to MCC Web site
    Section 6.7 References to Laws, Regulations, Policies, and 
Guidelines
    Section 6.8 MCC Status
    Section 6.9 Consultations
Article 7. Entry Into Force
    Section 7.1 Domestic Requirements
    Section 7.2 Conditions Precedent to Entry into Force
    Section 7.3 Date of Entry into Force
    Section 7.4 Compact Term
    Section 7.5 Provisional Application
Annex I: Program Description
    Schedule I--Green Prosperity Project
    Schedule II--Community-Based Health and Nutrition to Reduce 
Stunting Project
    Schedule III--Procurement Modernization Project
Annex II: Multi-Year Financial Plan Summary
Annex III: Description of the Monitoring and Evaluation Plan
Annex IV: Conditions to Disbursement of Compact Implementation 
Funding
Annex V: Definitions

Millennium Challenge Compact

Preamble

    This Millennium Challenge Compact (this ``Compact'') is between the 
United States of America, acting through the Millennium Challenge 
Corporation, a United States government corporation (``MCC''), and the 
Republic of Indonesia, acting through its ministries and other 
governmental entities as appropriate (the ``Government''). MCC and the 
Government are referred to in this Compact individually as a ``Party'' 
and collectively as the ``Parties''. Capitalized terms used in this 
Compact will have the meanings provided in Annex V.
    Recognizing that the Parties are committed to the shared goals of 
promoting economic growth and the elimination of extreme poverty in 
Indonesia and that MCC assistance under this Compact supports 
Indonesia's demonstrated commitment to strengthening good governance, 
economic freedom and investments in people;
    Recalling that the Government consulted with the private sector and 
civil society of Indonesia to determine the priorities for the use of 
Millennium Challenge Corporation assistance and developed and submitted 
to MCC a proposal for such assistance to achieve lasting economic 
growth and poverty reduction; and
    Recognizing that MCC wishes to help Indonesia implement the program 
described herein to achieve the goal and objectives described herein 
(as such program description and objectives may be amended from time to 
time in accordance with the terms hereof, the ``Program'');
    The Parties hereby agree as follows:

Article 1. Goal and Objectives

Section 1.1 Compact Goal

    The goal of this Compact is to reduce poverty in Indonesia through 
economic growth in Indonesia (the ``Compact Goal'').

Section 1.2 Project Objectives

    The Program consists of the projects described in Annex I (each a 
``Project'' and collectively, the ``Projects''). The objective of each 
of the Projects (each a ``Project Objective'' and collectively, the 
``Project Objectives'') is to:
    (a) (i) Increase productivity and reduce reliance on fossil fuels 
by expanding renewable energy; and (ii) increase productivity and 
reduce land-based greenhouse gas emissions by improving land use 
practices and management of natural resources (the ``GP Objective'');
    (b) Reduce and prevent low birth weight and childhood stunting and 
malnourishment of children in project areas, and to increase household 
income through cost savings, productivity growth and higher lifetime 
earnings (the ``Nutrition Objective''); and
    (c) Achieve significant government expenditure savings on procured 
goods and services, while assuring their quality satisfies the public 
need, and to achieve the delivery of public services as planned (the 
``Procurement Modernization Objective'').

Article 2. Funding and Resources

Section 2.1 Program Funding

    Upon entry into force of this Compact in accordance with Section 
7.3, MCC shall grant to the Government, under the terms of this 
Compact, an amount not to exceed Five Hundred Eighty-Eight Million 
United States Dollars (US$588,000,000) (``Program Funding'') for use by 
the Government to implement the Program. The allocation of Program 
Funding is generally described in Annex II.

Section 2.2 Compact Implementation Funding

    (a) Upon signature of this Compact, MCC shall grant to the 
Government, under the terms of this Compact and in addition to the 
Program Funding described in Section 2.1, an amount not to exceed 
Twelve Million United States Dollars (US$12,000,000) (``Compact 
Implementation Funding'') under Section 609(g) of the Millennium 
Challenge Act of 2003, as amended (the ``MCA Act''), for use by the 
Government to facilitate implementation of the Compact, including for 
the following purposes:
    (i) Financial management and procurement activities (including 
costs related to standby agents procured by MCC);
    (ii) Administrative activities (including start-up costs such as 
staff salaries) and administrative support expenses such as rent, 
computers and other information technology or capital equipment;
    (iii) Monitoring and evaluation activities;
    (iv) Feasibility studies and assessments; and
    (v) Other activities to facilitate Compact implementation as 
approved by MCC. The allocation of Compact Implementation Funding is 
generally described in Annex II.

[[Page 73696]]

    (b) In accordance with Section 7.5, this Section 2.2 and other 
provisions of this Compact applicable to Compact Implementation Funding 
shall be effective, for purposes of Compact Implementation Funding 
only, as of the date this Compact is signed by MCC and the Government.
    (c) Each Disbursement of Compact Implementation Funding shall be 
subject to satisfaction of the conditions precedent to such 
disbursement as set forth in Annex IV.
    (d) If MCC determines that the full amount of Compact 
Implementation Funding available under Section 2.2(a) exceeds the 
amount that reasonably can be utilized for the purposes set forth in 
Section 2.2(a), MCC, by written notice to the Government, may withdraw 
the excess amount, thereby reducing the amount of the Compact 
Implementation Funding available under Section 2.2(a) (such excess, the 
``Excess CIF Amount''). In such event, the amount of Compact 
Implementation Funding granted to the Government under Section 2.2(a) 
shall be reduced by the Excess CIF Amount, and MCC shall have no 
further obligations with respect to such Excess CIF Amount.
    (e) MCC, at its option by written notice to the Government, may 
elect to grant to the Government an amount equal to all or a portion of 
such Excess CIF Amount as an increase in the Program Funding, and such 
additional Program Funding shall be subject to the terms and conditions 
of this Compact applicable to Program Funding.

Section 2.3 MCC Funding

    Program Funding and Compact Implementation Funding are collectively 
referred to in this Compact as ``MCC Funding,'' and includes any 
refunds or reimbursements of Program Funding or Compact Implementation 
Funding paid by the Government in accordance with this Compact.

Section 2.4 Disbursement

    In accordance with this Compact and the Program Implementation 
Agreement, MCC shall disburse MCC Funding for expenditures incurred in 
furtherance of the Program (each instance, a ``Disbursement''). Subject 
to the satisfaction of all applicable conditions precedent, the 
proceeds of Disbursements shall be made available to the Government, at 
MCC's sole election, by (a) deposit to one or more bank accounts 
established by the Government and acceptable to MCC (each, a 
``Permitted Account'') or (b) direct payment to the relevant provider 
of goods, works or services for the implementation of the Program. MCC 
Funding may be expended only for Program expenditures.

Section 2.5 Interest

    The Government shall pay or transfer to MCC, in accordance with the 
Program Implementation Agreement, any interest or other earnings that 
accrue on MCC Funding prior to such funding being used for a Program 
purpose.

Section 2.6 Government Resources; Budget

    (a) The Government shall provide all funds and other resources, and 
shall take all actions, that are necessary to carry out the 
Government's responsibilities under this Compact.
    (b) The Government shall use its best efforts to ensure that all 
MCC Funding it receives or is projected to receive in each of its 
fiscal years is fully accounted for in its annual budget on a multi-
year basis.
    (c) The Government shall not reduce the normal and expected 
resources that it would otherwise receive or budget from sources other 
than MCC for the activities contemplated under this Compact and the 
Program.
    (d) Unless the Government discloses otherwise to MCC in writing, 
MCC Funding shall be in addition to the resources that the Government 
would otherwise receive or budget for the activities contemplated under 
this Compact and the Program.

Section 2.7 Limitations on the Use of MCC Funding

    The Government shall ensure that MCC Funding is not used for any 
purpose that would violate United States law or policy, as specified in 
this Compact or as further notified to the Government in writing or by 
posting from time to time on the MCC Web site at www.mcc.gov (the ``MCC 
Web site''), including but not limited to the following purposes:
    (a) For assistance to, or training of, the military, police, 
militia, national guard or other quasi-military organization or unit;
    (b) For any activity that is likely to cause a substantial loss of 
United States jobs or a substantial displacement of United States 
production;
    (c) To undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard, 
as further described in MCC's Environmental Guidelines and any guidance 
documents issued in connection with the guidelines posted from time to 
time on the MCC Web site or otherwise made available to the Government 
(collectively, the ``MCC Environmental Guidelines''); or
    (d) To pay for the performance of abortions as a method of family 
planning or to motivate or coerce any person to practice abortions, to 
pay for the performance of involuntary sterilizations as a method of 
family planning or to coerce or provide any financial incentive to any 
person to undergo sterilizations or to pay for any biomedical research 
which relates, in whole or in part, to methods of, or the performance 
of, abortions or involuntary sterilization as a means of family 
planning.

Section 2.8 Taxes

    (a) Unless the Parties specifically agree otherwise in writing, the 
Government shall ensure that all MCC Funding is free from the payment 
or imposition of any existing or future taxes, duties, levies or other 
similar charges (but not fees or charges for services that are 
generally applicable in Indonesia, reasonable in amount and imposed on 
a non-discriminatory basis) (``Taxes'') in Indonesia (including any 
such Taxes imposed by a national, regional, local or other governmental 
or taxing authority in Indonesia) in accordance with prevailing tax 
laws and regulations in Indonesia. In addition, should any Tax be 
levied and paid using MCC Funding in accordance with such prevailing 
tax laws and regulations in Indonesia, such Taxes will be reimbursed in 
accordance with the Minister of Finance regulation referenced in sub-
section (b) below.
    Specifically, and without limiting the generality of the foregoing, 
MCC Funding shall be free from the payment of:
    (i) Customs duties, import taxes, and other similar charges on any 
goods, works or services introduced into Indonesia in connection with 
the Program;
    (ii) Value added tax, sales tax on luxury items, excise tax, 
property transfer tax, and other similar charges on any transactions 
involving goods, works or services in connection with the Program;
    (iii) Taxes and other similar charges on ownership, possession or 
use of any property in connection with the Program; and
    (iv) Taxes and other similar charges on income, profits or gross 
receipts attributable to work performed in connection with the Program 
and related social security taxes and other similar charges on all 
natural or legal persons performing work in connection with the Program 
except: (1) Natural persons who are citizens or permanent

[[Page 73697]]

residents of Indonesia; and (2) legal persons formed under the laws of 
Indonesia (but excluding MCA-Indonesia, which is formed for the purpose 
of implementing the Government's obligations hereunder).
    (b)(i) The mechanisms that the Government shall use to implement 
the tax exemption required by Section 2.8(a) are set forth in the 
Program Implementation Agreement. Such mechanisms shall include 
exemptions from the payment of Taxes that have been granted in 
accordance with applicable law, or reimbursement of Taxes by the 
Government to MCA-Indonesia or to the taxpayer. In the case of 
reimbursement, the Minister of Finance shall issue a regulation 
governing the manner in which such reimbursements shall be implemented.
    (ii) For those Taxes for which reimbursement shall be the method of 
implementation, if a Tax has been paid in accordance with existing Tax 
laws and regulations, the Government shall reimburse to MCA-Indonesia 
or the taxpayer an amount equal to the amount of Tax paid in the 
currency of Indonesia within thirty (30) working days (or such other 
period as may be agreed in writing by the Parties) after the 
fulfillment of all required documentation by MCA-Indonesia.
    (c) If a Tax has been paid contrary to the requirements of Sections 
2.8(a) or (b) or the Program Implementation Agreement, or if a 
reimbursement has not been properly issued in accordance with Section 
2.8(b)(ii) or the Program Implementation Agreement, the Government 
shall reimburse promptly to MCC (or if directed by MCC, to MCA-
Indonesia) the amount of such Tax in United States dollars or the 
currency of Indonesia within thirty (30) days (or such other period as 
may be agreed in writing by the Parties) after the Government is 
notified in writing (whether by MCC or MCA-Indonesia) attaching the 
relevant documents evidencing that such Tax has been paid.
    (d) No MCC Funding, proceeds thereof or Program Assets may be 
applied by the Government in satisfaction of its obligations under 
Section 2.8(c).

Article 3. Implementation

Section 3.1 Program Implementation Agreement

    The Parties shall enter into an agreement providing further detail 
on the implementation arrangements, fiscal accountability and 
disbursement and use of MCC Funding, among other matters (the ``Program 
Implementation Agreement'' or ``PIA''); and the Government shall 
implement the Program in accordance with this Compact, the PIA, any 
Supplemental Agreement and any Implementation Letter.

Section 3.2 Government Responsibilities

    (a) The Government has principal responsibility for overseeing and 
managing the implementation of the Program.
    (b) With the prior written consent of MCC, the Government may 
designate an entity to be established through passage of a ministerial 
decree or other legal instrument acceptable to MCC and its implementing 
regulation (together, the ``Establishment Decree''), as the accountable 
entity to implement the Program and to exercise and perform the 
Government's right and obligation to oversee, manage and implement the 
Program, including without limitation, managing the implementation of 
Projects and their Activities, allocating resources and managing 
procurements. Such entity is referred to herein as ``MCA-Indonesia,'' 
and will have the authority to bind the Government with regard to all 
Program activities. The designation contemplated by this Section 3.2(b) 
shall not relieve the Government of any obligations or responsibilities 
hereunder or under any related agreement, for which the Government 
remains fully responsible. MCC hereby acknowledges and consents to the 
designation in this Section 3.2(b).
    (c) The Government shall ensure that any Program Assets or services 
funded in whole or in part (directly or indirectly) by MCC Funding are 
used solely in furtherance of this Compact and the Program unless MCC 
agrees otherwise in writing.
    (d) The Government shall take all necessary or appropriate steps to 
achieve the Project Objectives during the Compact Term (including, 
without limiting Section 2.6(a), funding all costs that exceed MCC 
Funding and are required to carry out the terms hereof and achieve such 
objectives, unless MCC agrees otherwise in writing).
    (e) The Government shall fully comply with the Program Guidelines, 
as applicable, in its implementation of the Program.
    (f) The Government shall grant to MCC a perpetual, irrevocable, 
royalty-free, worldwide, fully paid, assignable right and license to 
practice or have practiced on its behalf (including the right to 
produce, reproduce, publish, repurpose, use, store, modify, or make 
available) any portion or portions of Intellectual Property as MCC sees 
fit in any medium, now known or hereafter developed, for any purpose 
whatsoever.

Section 3.3 Policy Performance

    In addition to undertaking the specific policy, legal and 
regulatory reform commitments identified in Annex I (if any), the 
Government shall seek to maintain and to improve its level of 
performance under the policy criteria identified in Section 607 of the 
MCA Act, and the selection criteria and methodology used by MCC.

Section 3.4 Accuracy of Information

    The Government assures MCC that, as of the date this Compact is 
signed by the Government, the information provided to MCC by or on 
behalf of the Government in the course of reaching agreement with MCC 
on this Compact is true, correct and complete in all material respects.

Section 3.5 Implementation Letters

    From time to time, MCC may provide guidance to the Government in 
writing on any matters relating to this Compact, MCC Funding or 
implementation of the Program (each, an ``Implementation Letter''). The 
Government shall apply such guidance in implementing the Program. The 
Parties may also issue jointly agreed-upon Implementation Letters to 
confirm and record their mutual understanding on aspects related to the 
implementation of this Compact, the PIA or other related agreements.

Section 3.6 Procurement and Grants

    (a) Notwithstanding the Government's commitment to procurement 
reform as demonstrated by Indonesian law, the Government shall ensure 
that the procurement of all goods, works and services by the Government 
or any Provider to implement the Program shall be consistent with the 
``MCC Program Procurement Guidelines'' posted from time to time on the 
MCC Web site (the ``MCC Program Procurement Guidelines''). The MCC 
Program Procurement Guidelines include the following requirements, 
among others:
    (i) Open, fair, and competitive procedures must be used in a 
transparent manner to solicit, award and administer contracts and to 
procure goods, works and services;
    (ii) Solicitations for goods, works, and services must be based 
upon a clear and accurate description of the goods, works and services 
to be acquired;
    (iii) Contracts must be awarded only to qualified contractors that 
have the capability and willingness to perform the contracts in 
accordance with their

[[Page 73698]]

terms on a cost effective and timely basis; and
    (iv) No more than a commercially reasonable price, as determined, 
for example, by a comparison of price quotations and market prices, 
shall be paid to procure goods, works and services.
    (b) The Government shall ensure that any grant issued to any non-
governmental entity in furtherance of the Program (the ``Grant'') is 
selected, implemented and administered pursuant to open, fair, and 
competitive procedures administered in a transparent manner. In 
furtherance of this requirement, and prior to the issuance of any 
Grant, the Government and MCC shall agree upon written procedures to 
govern the identification of potential recipients, the selection and 
the award of Grants. Such agreed procedures shall be posted on the MCA-
Indonesia Web site.

Section 3.7 Records; Accounting; Covered Providers; Access

    (a) Government Books and Records. The Government shall maintain, 
and shall use its best efforts to ensure that all Covered Providers 
maintain, accounting books, records, documents and other evidence 
relating to the Program adequate to show, to MCC's satisfaction, the 
use of all MCC Funding and the implementation and results of the 
Program (``Compact Records''). In addition, the Government shall 
furnish or cause to be furnished to MCC, upon its request, originals or 
copies of such Compact Records.
    (b) Accounting. The Government shall maintain and shall use its 
best efforts to ensure that all Covered Providers maintain Compact 
Records in accordance with generally accepted accounting principles 
prevailing in the United States, or at the Government's option and with 
MCC's prior written approval, other accounting principles, such as 
those: (i) Prescribed by the International Accounting Standards Board; 
or (ii) then prevailing in Indonesia. Compact Records shall be 
maintained for at least five (5) years after the end of the Compact 
Term or for such longer period, if any, required to resolve any 
litigation, claims or audit findings or any applicable legal 
requirements.
    (c) Providers and Covered Providers. Unless the Parties agree 
otherwise in writing, a ``Provider'' is (i) any entity of the 
Government that receives or uses MCC Funding or any other Program Asset 
in carrying out activities in furtherance of this Compact or (ii) any 
third party that receives at least US$50,000 in the aggregate of MCC 
Funding (other than as salary or compensation as an employee of an 
entity of the Government) during the Compact Term. A ``Covered 
Provider'' is: (i) A non-United States Provider that receives (other 
than pursuant to a direct contract or agreement with MCC) US$300,000 or 
more of MCC Funding in any Government fiscal year or any other non-
United States person or entity that receives, directly or indirectly, 
US$300,000 or more of MCC Funding from any Provider in such fiscal 
year; or (ii) any United States Provider that receives (other than 
pursuant to a direct contract or agreement with MCC) US$500,000 or more 
of MCC Funding in any Government fiscal year or any other United States 
person or entity that receives, directly or indirectly, US$500,000 or 
more of MCC Funding from any Provider in such fiscal year.
    (d) Access. Upon MCC's request, the Government, at all reasonable 
times, shall permit, or cause to be permitted, authorized 
representatives of MCC, an authorized Inspector General of MCC 
(``Inspector General''), the United States Government Accountability 
Office, any auditor responsible for an audit contemplated herein or 
otherwise conducted in furtherance of this Compact, and any agents or 
representatives engaged by MCC or the Government to conduct any 
assessment, review or evaluation of the Program, the opportunity to 
audit, review, evaluate or inspect facilities, assets and activities 
funded in whole or in part by MCC Funding.

Section 3.8 Audits; Reviews

    (a) Government Audits. Except as the Parties may agree otherwise in 
writing, the Government shall, on at least a semi-annual basis, 
conduct, or cause to be conducted, financial audits of all 
disbursements of MCC Funding covering the period from signing of this 
Compact until the earlier of the following December 31 or June 30 and 
covering each six-month period thereafter ending December 31 and June 
30, through the end of the Compact Term. In addition, upon MCC's 
request, the Government shall ensure that such audits are conducted by 
an independent auditor approved by MCC and named on the list of local 
auditors approved by the Inspector General or a United States-based 
certified public accounting firm selected in accordance with the 
``Guidelines for Financial Audits Contracted by MCA'' (the ``Audit 
Guidelines'') issued and revised from time to time by the Inspector 
General, which are posted on the MCC Web site. Audits shall be 
performed in accordance with the Audit Guidelines and be subject to 
quality assurance oversight by the Inspector General. Each audit shall 
be completed and the audit report delivered to MCC no later than 90 
days after the first period to be audited and no later than 90 days 
after each June 30 and December 31 thereafter, or such other period as 
the Parties may otherwise agree in writing.
    (b) Audits of Other Entities. The Government shall ensure that MCC 
financed agreements between the Government or any Provider, on the one 
hand, and (i) a United States nonprofit organization, on the other 
hand, state that the United States nonprofit organization is subject to 
the applicable audit requirements contained in OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations,'' 
issued by the United States Office of Management and Budget; (ii) a 
United States for-profit Covered Provider, on the other hand, state 
that the United States for-profit organization is subject to audit by 
the applicable United States Government agency, unless the Government 
and MCC agree otherwise in writing; and (iii) a non-U.S. Covered 
Provider, on the other hand, state that the non-U.S. Covered Provider 
is subject to audit in accordance with the Audit Guidelines.
    (c) Corrective Actions. The Government shall use its best efforts 
to ensure that each Covered Provider: (i) Takes, where necessary, 
appropriate and timely corrective actions in response to audits; (ii) 
considers whether the results of the Covered Provider's audit 
necessitates adjustment of the Government's records; and (iii) permits 
independent auditors to have access to its records and financial 
statements as necessary.
    (d) Audit by MCC. MCC shall have the right to arrange for audits of 
the Government's use of MCC Funding.
    (e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used 
to fund the costs of any audits, reviews or evaluations required under 
this Compact.

Article 4. Communications

Section 4.1 Communications

    Any document or communication required or submitted by either Party 
to the other under this Compact shall be in writing and, except as 
otherwise agreed with MCC, in English. For this purpose, the address of 
each Party is set forth below.
    To MCC:
    Millennium Challenge Corporation, Attention: Vice President, 
Department of Compact Operations, (with a copy to the Vice President 
and General

[[Page 73699]]

Counsel), 875 Fifteenth Street NW., Washington, DC 20005, United States 
of America, Facsimile: +1 (202) 521-3700, Telephone: +1 (202) 521-3600, 
Email: VPOperations@mcc.gov: (Vice President, Compact Operations), 
VPGeneralCounsel@mcc.gov (Vice President and General Counsel)
To the Government:
    Ministry of National Development Planning/National Development 
Planning Agency (BAPPENAS), Attention: Vice Minister of National 
Development Planning, Jalan Taman Suropati 2, Jakarta Pusat 10310, 
Republic of Indonesia, Facsimile: +62 (21) 3103314, Telephone: +62 (21) 
336207, 3905650
To MCA-Indonesia:
    Upon establishment of MCA-Indonesia, MCA-Indonesia will notify the 
Parties of its contact details.

Section 4.2 Representatives

    For all purposes of this Compact, the Government shall be 
represented by the individual holding the position of, or acting as, 
Vice Minister of National Development Planning (BAPPENAS) of the 
Republic of Indonesia, and MCC shall be represented by the individual 
holding the position of, or acting as, Vice President, Department of 
Compact Operations (each of the foregoing, a ``Principal 
Representative''). Each Party, by written notice to the other Party, 
may designate one or more additional representatives (each, an 
``Additional Representative'') for all purposes other than signing 
amendments to this Compact. The Government hereby designates the 
Chairman of MCA-Indonesia as an Additional Representative. MCC hereby 
designates the Deputy Vice President, Department of Compact Operations, 
Europe, Asia, Pacific and Latin America, as an Additional 
Representative. A Party may change its Principal Representative to a 
new representative that holds a position of equal or higher authority 
upon written notice to the other Party.

Section 4.3 Signatures

    Signatures to this Compact and to any amendment to this Compact 
shall be original signatures appearing on the same page or in an 
exchange of letters or diplomatic notes. With respect to all documents 
arising out of this Compact (other than the Program Implementation 
Agreement) and amendments thereto, signatures may be delivered by 
facsimile or electronic mail and in counterparts and shall be binding 
on the Party delivering such signature to the same extent as an 
original signature would be.

Article 5. Termination; Suspension; Expiration

Section 5.1 Termination; Suspension

    (a) Either Party may terminate this Compact without cause in its 
entirety by giving the other Party thirty (30) days' prior written 
notice. MCC may also terminate this Compact or MCC Funding without 
cause in part by giving the Government thirty (30) days' prior written 
notice.
    (b) MCC may, immediately, upon written notice to the Government, 
suspend or terminate this Compact or MCC Funding, in whole or in part, 
and any obligation related thereto, if MCC determines that any 
circumstance identified by MCC as a basis for suspension or termination 
(whether in writing to the Government or by posting on the MCC Web 
site) has occurred, which circumstances include but are not limited to 
the following:
    (i) The Government fails to comply with its obligations under this 
Compact or any other agreement or arrangement entered into by the 
Government in connection with this Compact or the Program;
    (ii) An event or series of events has occurred that makes it 
probable that any of the Project Objectives will not be achieved during 
the Compact Term or that the Government will not be able to perform its 
obligations under this Compact;
    (iii) A use of MCC Funding or continued implementation of this 
Compact or the Program violates applicable law or United States 
Government policy;
    (iv) The Government or any other person or entity receiving MCC 
Funding or using Program Assets is engaged in activities that are 
contrary to the national security interests of the United States;
    (v) An act has been committed or an omission or an event has 
occurred that would render Indonesia ineligible to receive United 
States economic assistance under Part I of the Foreign Assistance Act 
of 1961, as amended (22 U.S.C. 2151 et seq.), by reason of the 
application of any provision of such act or any other provision of law;
    (vi) The Government has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of 
Indonesia for assistance under the MCA Act; and
    (vii) The Government or another person or entity receiving MCC 
Funding or using Program Assets is found to have been convicted of a 
narcotics offense or to have been engaged in drug trafficking.

Section 5.2 Consequences of Termination, Suspension or Expiration

    (a) Upon the suspension or termination, in whole or in part, of 
this Compact or any MCC Funding, or upon the expiration of this 
Compact, the provisions of Section 4.2 of the Program Implementation 
Agreement shall govern the post-suspension, post-termination or post-
expiration treatment of MCC Funding, any related Disbursements and 
Program Assets. Any portion of this Compact, MCC Funding, the Program 
Implementation Agreement or any other Supplemental Agreement that is 
not suspended or terminated shall remain in full force and effect.
    (b) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact if MCC determines that the Government or other relevant 
person or entity has committed to correct each condition for which MCC 
Funding was suspended or terminated.

Section 5.3 Refunds; Violation

    (a) If any MCC Funding, any interest or earnings thereon, or any 
Program Asset is used for any purpose in violation of the terms of this 
Compact, then MCC may require the Government to repay to MCC in United 
States Dollars the value of the misused MCC Funding, interest, 
earnings, or asset, plus interest within thirty (30) days after the 
Government's receipt of MCC's request for repayment. The Government 
shall not use MCC Funding, proceeds thereof or Program Assets to make 
such payment.
    (b) Notwithstanding any other provision in this Compact or any 
other existing agreement to the contrary, MCC's right under Section 
5.3(a) to obtain a refund shall continue during the Compact Term and 
for a period of (i) five (5) years thereafter or (ii) one (1) year 
after MCC receives actual knowledge of such violation, whichever is 
later.

Section 5.4 Survival

    The Government's responsibilities under Sections 2.7, 3.7, 3.8, 
5.2, 5.3, and 6.4 shall survive the expiration, suspension or 
termination of this Compact.

Article 6. Compact Annexes; Amendments; Governing Law

Section 6.1 Annexes

    Each annex to this Compact constitutes an integral part hereof, and 
references to ``Annex'' mean an annex to this Compact unless otherwise 
expressly stated.

[[Page 73700]]

Section 6.2 Amendments

    (a) The Parties may amend this Compact only by a written agreement 
signed by the Principal Representatives (or such other government 
official designated by the Principal Representative, provided prior 
notice is given to the other Party).
    (b) Notwithstanding Section 6.2(a), the Parties may agree in 
writing, signed by the Principal Representatives (or such other 
government official designated by the Principal Representative, 
provided prior notice is given to the other Party) or any Additional 
Representative, to modify any Annex to: (i) Suspend, terminate or 
modify any Project or Activity, or to create a new project; (ii) change 
the allocations of funds as set forth in Annex II as of the date hereof 
(including to allocate funds to a new project); (iii) modify the 
Implementation Framework described in Annex I; or (iv) add, delete or 
waive any condition precedent described in Annex IV; provided that, in 
each case, any such modification: (1) Is consistent in all material 
respects with the Project Objectives; (2) does not cause the amount of 
Program Funding to exceed the aggregate amount specified in Section 2.1 
(as may be modified by operation of Section 2.2(e)); (3) does not cause 
the amount of Compact Implementation Funding to exceed the aggregate 
amount specified in Section 2.2(a); (4) does not reduce the 
Government's responsibilities or contribution of resources required 
under Section 2.6; and (5) does not extend the Compact Term.

Section 6.3 Inconsistencies

    In the event of any conflict or inconsistency between:
    (a) any Annex and any of Articles 1 through 7, such Articles 1 
through 7, as applicable, will prevail; or
    (b) this Compact and any other agreement between the Parties 
regarding the Program, this Compact will prevail.

Section 6.4 Governing Law

    This Compact is an international agreement and as such shall be 
governed by the principles of international law.

Section 6.5 Additional Instruments

    Any reference to activities, obligations or rights undertaken or 
existing under or in furtherance of this Compact or similar language 
shall include activities, obligations and rights undertaken by, or 
existing under or in furtherance of any agreement, document or 
instrument related to this Compact and the Program.

Section 6.6 References to MCC Web Site

    Any reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a document or 
information available on, or notified by posting on the MCC Web site 
shall be deemed a reference to such document or information as updated 
or substituted on the MCC Web site from time to time.

Section 6.7 References to Laws, Regulations, Policies and Guidelines

    Each reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a law, regulation, 
policy, guideline or similar document shall be construed as a reference 
to such law, regulation, policy, guideline or similar document as it 
may, from time to time, be amended, revised, replaced, or extended and 
shall include any law, regulation, policy, guideline or similar 
document issued under or otherwise applicable or related to such law, 
regulation, policy, guideline or similar document.

Section 6.8 MCC Status

    MCC is a United States government corporation acting on behalf of 
the United States Government in the implementation of this Compact. MCC 
and the United States Government assume no liability for any claims or 
loss arising out of activities or omissions under this Compact. The 
Government waives any and all claims against MCC or the United States 
Government or any current or former officer or employee of MCC or the 
United States Government for all loss, damage, injury, or death arising 
out of activities or omissions under this Compact, and agrees that it 
will not bring any claim or legal proceeding of any kind against any of 
the above entities or persons for any such loss, damage, injury, or 
death. The Government agrees that MCC and the United States Government 
or any current or former officer or employee of MCC or the United 
States Government will be immune from the jurisdiction of all courts 
and tribunals of Indonesia for any claim or loss arising out of 
activities or omissions under this Compact.

Section 6.9 Consultations

    Either Party may, at any time, request consultations relating to 
the interpretation or implementation of this Compact. Such 
consultations will begin at the earliest possible date.

Article 7. Entry Into Force

Section 7.1 Domestic Requirements

    Before this Compact enters into force, the Government shall proceed 
in a timely manner to complete all of its domestic requirements 
necessary for this Compact and the PIA to enter into force as an 
international agreement.

Section 7.2 Conditions Precedent to Entry Into Force

    Before this Compact enters into force:
    (a) The PIA shall have been signed by the parties thereto;
    (b) The Government shall have delivered to MCC:
    (i) A letter signed and dated by the Principal Representative of 
the Government, or such other duly authorized representative of the 
Government acceptable to MCC, confirming that the Government has 
completed its domestic requirements necessary for this Compact to enter 
into force and that the other conditions precedent to entry into force 
in this Section 7.2 have been met