Secretary of State Hillary Rodham Clinton, right, and Indonesian Finance Minister Agus Martowardjo, second from right, during ceremonies on the signing of an MCC agreement.

By MacKenzie C. Babb
VIIP Staff Writer
Washington,
23 November 2011

Secretary of State Hillary Rodham Clinton and Indonesian Finance Minister Agus Martowardojo have signed a five-year deal between the U.S. government’s Millennium Challenge Corporation (MCC) and the government of Indonesia to alleviate poverty by supporting economic growth.

“The MCC and the government of Indonesia have worked for almost three years to develop this $600 million compact, one of our largest ever, to reduce poverty and promote economic growth hand-in-hand with the Indonesian government and people,” Secretary of State Hillary Rodham Clinton said November 19 at the signing ceremony, which took place on the sidelines of the East Asia Summit in Bali.

Calling the agreement a significant milestone in the relationship between two of the world’s largest democracies, Clinton said the compact reflects shared values and Indonesia’s priorities.

According to a Millennium Challenge Corporation news release November 18, the new compact will focus on three projects to achieve economic growth.

The Green Prosperity Project is designed to support low-carbon economic growth by expanding renewable energy and improving the management of natural resources. Clinton said more than half of the compact’s funds are devoted to this project, which seeks to end unsustainable land-use practices such as illegal logging and water pollution by fostering low-carbon development in local communities to allow rural people to raise their incomes in an environmentally sustainable way.

The Community-Based Nutrition to Prevent Stunting Project is designed to prevent low birth weight, childhood stunting and malnourishment. Clinton said this project marks the first MCC compact with a focus on early life nutrition. It is expected to help as many as 2.9 million children and their families across Indonesia.

The secretary said that ensuring adequate nutrition from the start of pregnancy through a child’s first two years is critical for physical and cognitive development.

“If you want a healthier, better educated workforce, it starts in those very early months of life. And ultimately, an early focus on nutrition can reduce poverty, promote broader prosperity and improve the security and stability of communities and nations,” Clinton said, adding that the new project complements the critical investments already made in this area by the Indonesian government.

The third area of focus in the MCC compact is the Procurement Modernization Project, designed to achieve significant savings in government procurement and improve the delivery of public services. Clinton said the project reflects Indonesia’s commitment to being a leader in open and transparent government, and will support efforts to reform and improve the government system of making purchases on behalf of the people. She said the project has the potential to save as much as $15 billion annually for the government and people of Indonesia.

“Open government practices save money, reduce corruption, improve efficiency and accountability, and produce results for citizens,” Clinton said. As a co-founder of the Open Government Partnership, Indonesia “is positioned to really help demonstrate modernizing government practices to countries not only throughout the region but far beyond.”

The Millennium Challenge Corporation is an independent U.S. foreign aid agency formed in 2004 that seeks to end global poverty by delivering foreign assistance to countries committed to democratic governance through loans that focus on country-led ownership for solutions, implementation and results. MCC grants complement other U.S. and international development programs. The secretary of state, treasury secretary, U.S. trade representative and the U.S. Agency for International Development administrator serve on the board along with four private sector representatives.