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At the same time, its deft leadership  c)/role in regional and global issues has given the country increasing political prominence. Indonesia is  c)a nonpermanent member of the United Nations' Security Council for the 19951997 term, and it will  c)^assume the chairmanship of the 52nation Organization of Islamic Conference (OIC) this year.  c)Indonesia is a founder and an active member of the NonAligned Movement and the Association of  c)Southeast Asian Nations (ASEAN). The management of its rich but threatened natural resources is  c)Nhaving global impact on biodiversity and greenhouse gas emissions. Indonesia is the fourth most  c)populous country in the world, with 190 million people, and has the world's largest Moslem population.  c)mThe Indonesian archipelago, which spans a distance greater than 3,000 miles east to west, is strategically located in terms of trade and international security.  c)Indonesia's economy continues to grow at an annual rate of about 7%, with strong potential to emerge  c)as a major new economic force in the AsiaPacific rim. This performance is primarily a result of sound  c)>macroeconomic and sectoral growth policies, an area in which USAID has provided key assistance.  c)zWith a current per capita income of $919 and a poverty rate of just under 14%, Indonesia's economic  c)performance ranks among the best in the developing world. Noted achievements include sustained  c)growth in jobs, reduced dependency on oil exports, liberalization of banking, the development of  c)financial markets, foreign investment deregulation, and trade deregulation. Globally, Indonesia is  c)playing an unprecedented leadership role in trade deregulation through the General Agreement on  c){Tariffs and Trade (GATT) and the Asia Pacific Economic Cooperation (APEC). The country's debt  c)0burden is approaching $100 billion, and only Brazil and Mexico have larger external debts among  c)developing nations. However, the Government of Indonesia (GOI) does have a long record of prudent debt management.  c)>Indonesia's economic achievements have been matched by similar improvements in the quality of life  c)/with, for example, a dramatic increase in life expectancy from 44 years in 1965 to 61 years in 1990,  c)a halving of the infant mortality rate from 138 per 1,000 births in 1965 to 56 per 1,000 in 1993, a  c)halving of the fertility rate from 5.6 births per woman in the late 1960s to 2.9 in 1994, and nearly  c)universal primary school enrollment. USAID's involvement in helping to achieve these successes in  c)the social sectors has included longterm efforts in the areas of family planning (including a successful  c)social marketing model), health (especially child survival and health care financing), and education and training.  }K - The Development Challenge  }K!- c) Many challenges still lie ahead for Indonesia. Current per capita income is less than half of Thailand's  c)and the lowest of any country in southeast Asia, and its goal of newly industrialized country (NIC)  c)/status is 25 years away at best. The 26 million Indonesians living in poverty exceed the populations  c)zof most countries in which USAID works. While improving, the infant and maternal mortality rates are  c) still the highest in ASEAN. To reach the goal of two children per family by 2005, the number of new  c)contraceptive users will need to increase by a staggering 10 million (more than all of the current  c)=contraceptive users in subSaharan Africa). Although still in the early stages of the HIV/AIDS epidemic,  c)0conditions exist in Indonesia that are conducive to rapid, widespread transmission. Only 60% of  c)Indonesians aged 1315 attend school. Less than 1% of Indonesia's population has bachelor degrees  c)lor higher. Only 35% of the population has access to safe drinking water compared to 81% in the Philippines. "h)0*0*0*z+"Ԍ c)ԙGrowing incomes and increased economic welfare have given rise to demands for greater political  c) freedom and broader participation, but these aspirations are yet to be matched by significantly more  c)\openness and transparency in government decisionmaking. The government's reaction to demands for a more open political system has been mixed.  c) To protect its natural resources, the government has recently enacted laws to prohibit the export of  c)=endangered marine species and to reduce fishing practices that destroy coral reefs. Indonesia also led  c)the effort to support marine resource management in the Biodiversity Treaty Conference of the Parties  c)II in November, 1995, in Jakarta, pledging significant commitments to decentralize and strengthen  c)marine resource management. However, as industrial growth brings jobs and prosperity to many,  c)?poorly enforced and outdated environmental regulations are raising costs to society and slowing  c)Mexpansion. Deforestation, which occurs at the rate of 1 million acres per year, is a problem that has global ramifications.  c)Yet these formidable challenges cannot belie Indonesia's improving economic and social indicators and,  c)Mas these improvements continue, USAID is increasingly emphasizing transition to a program which is  c)zmore reliant on Indonesian institutions and which will ultimately be less resourceintensive. The long c)term goal of our strategy in Indonesia is to consolidate the successes of the program, foster  c) relationships between U.S. institutions and their Indonesian counterparts, and to graduate Indonesia from development assistance.  }Kh- Other Donors  c)0The donor community pledged over $5 billion in 1995 for development activities in Indonesia. The  c)United States is the fifth largest bilateral partner. Bilateral contributors with programs currently larger  c)than that of the United States (based on 1995 pledges) are Japan, the United Kingdom, France, and  c)Germany. The World Bank's program in Indonesia is its fourth largest (only the Bank's programs in  c)India, China, and Mexico are larger) and the Asian Development Bank (ADB) program in Indonesia is its largest.  }Kp- FY 1997 Program  c)#hxP7ͷP#USAID's strategy for helping Indonesia achieve broadbased and sustainable growth concentrates on  c) economic management, health and family planning, environmental management, and local institutions  c)^which support democracy. United States national interest is defined by Indonesia's trade and  c)investment potential, its potential as a democratic and stabilizing influence in the region, and its key  c)jrole in global issues such as natural resources management. Indonesia's strategic location and growing  c)international influence are having an impact on security, trade and investment issues within the region and with the United States.  c)Nearly onehalf of Development Assistance funding planned in FY 1997 is for activities in the health  c)and population sector. About onethird of the FY 1997 funding is for environmental activities, with  c)/the remainder to be used for promoting economic growth and strengthening institutions that promote rule of law and popular participation.  }K(#- Agency Goal: Encouraging Broadbased Economic Growth  }K#- #hxP7ͷP# Strategic Objective 1: Sustained Economic Growth in the Transition from Economic Development Assistance to Development Cooperation  c)?Indonesia's per capita income is the lowest in ASEAN, and there are still 26 million people living in  c)poverty. At the same time, Indonesia's human capital and institutional base for dealing with economic  c)Mpolicy and management issues is still very thin. Indonesia can benefit from continued access to U.S.  c)knowhow in economic management in order to succeed in the formidable task of achieving sustained"h)0*0*0*z+"  c)>economic growth and to bring itself to the edge of newly industrialized country status in the twenty c)first century. USAID's objective is to promote continued economic growth while moving to a  c)relationship which emphasizes sustainable, mutually beneficial linkages between Indonesia and the  c)"United States. This objective will provide support in key areas of economic management and  c)?simultaneously will enhance the opportunities for U.S. business to participate in and contribute to Indonesian economic growth. This objective anticipates two specific outcomes:  Bullet Wijaya" $(D]Bullet Wijaya$Policies for sustainable, broadbased economic growth improved, and  Bullet Wijaya" $Q)D]Bullet Wijaya$Economic management in key sectors and institutions improved.  c)|Over the past year, USAID's support for policy and institutional development continued to yield  c)significant results. Passage of the new Capital Markets Law in November 1995 was among the most  c)impressive achievements. The law establishes basic accounting standards and disclosure requirements  c)for listing shares on the Jakarta Stock Exchange (JSE) and enables greater oversight to prevent  c)securities fraud. It also strengthens the position of securities companies and makes investment in the  c)capital market as convenient as opening a bank account. In setting clear and transparent rules on  c)0public offerings, the law greatly strengthens the foundation for the sustainable development and  c)growth of Indonesia's financial markets. U.S. technical advisors played a critical role in helping to draft  c)this important law as well as in strengthening the Capital Markets Supervisory Board's regulatory and  c)enforcement capacity. While this technical assistance activity has now ended, the positive returns on this investment will extend well into the future.  c)Impressive progress also was achieved in the area of trade policy reform. Indonesia fully met all of its  c)Uruguay Round obligations, and in April, it became a founding member of the World Trade Organization  c)@(WTO). In May, 1995, the government demonstrated its commitment to the WTO and APEC by  c)announcing its most significant trade liberalization package to date. These reforms reduced tariffs  c)across the board on approximately twothirds of all tariff line items. Further, the government  c)]committed itself to reducing most tariffs to 5% by the year 2003. U.S. trade policy advisors were  c)instrumental in helping to advance these key reforms and in strengthening their counterparts' capacity to analyze, formulate, and implement sound, marketoriented trade policies.  c)U.S. technical advisors provided key support for the development of Indonesia's commercial laws.  c)Transparent and enforceable commercial codes are essential to the sustainable expansion of equitable  c)Oand efficient private sector trade and investment. USAID advisors, working closely with their  c){counterparts, played a critical role in advancing some key legal reforms. One of these is the new  c)yCorporation Law which was recently signed into law. The law establishes simple and clear procedures  c)for company formation and dissolution, and protects minority stockholders' interests by separating management and control and by defining minority shareholders' rights.  c)While Indonesia's past economic achievements are formidable, the challenges ahead are daunting.  c)Indonesia must continue to reform its economic policies and laws to strengthen the foundation for fair  c)and efficient private sector activity. At the same time, it must improve its capacity to implement and  c)enforce policies and laws which encourage open market competition in an increasingly competitive  c)global economy. Indonesia's high foreign debt and burgeoning current account deficit must be  c){managed cautiously to prevent a crisis similar to that which occurred in Mexico. To preserve and  c)0sustain the gains of increased trade liberalization, the nation's economic managers must achieve  c)macroeconomic stability without resorting to protectionist policies. While Indonesia's fundamentals  c)remain strong, a high degree of vigilance and technical competence is required. At the same time,  c)Indonesia's human resource and institutional capacity to meet these challenges is still limited. The high  c) value which Indonesians place on U.S. technical expertise and linkages to U.S. institutions gives the  c)United States a unique advantage in influencing policy formulation and implementation in Indonesia.  c)USAID is preparing to establish and strengthen linkages which promote twoway, mutually beneficialy cooperation between U.S. and Indonesian private and public sector actors and institutions."h)0*0*0*z+"Ԍ }K-ԙ Agency Goal: Stabilizing World Population Growth and Protecting Human Health  }K- #hxP7ͷP# Strategic Objective 2: Improved Health and Reduced Fertility  c)Despite impressive strides, Indonesia is still beset with major health and population challenges. As the  c)fourth largest country in the world, Indonesia's ability to overcome its existing population and health  c)challenges has global implications. HIV infections, currently estimated at 100,000 cases, are  c)increasing rapidly. Indonesia's maternal mortality rate far exceeds other ASEAN nations and many  c)lesser developed countries, even in Africa. Despite significant improvement, infant mortality is still the  c)highest among ASEAN countries. Indonesia, which after India has the largest population of any  c)country in which USAID provides family planning assistance, needs to increase the total number of  c)current family planning users from 15 million to over 25 million by 2005 in order to reach the national  c)"goal of an average of two children per family by 2005. Reduction of the fertility rate will help  c)MIndonesia preserve its gains from economic growth. Of the FY 1997 assistance request, USAID will  c)allocate $11.272 million for health activites and $17.371 million for population activities, as described below. USAID's objective of improving health and reducing fertility anticipates four specific outcomes:  Bullet Wijaya" $BD]Bullet Wijaya$Total fertility rate reduced,  Bullet Wijaya" $6CD]Bullet Wijaya$STD/HIV/AIDS prevalence among highrisk groups decreased,  Bullet Wijaya" $CD]Bullet Wijaya$Maternal mortality decreased, and  Bullet Wijaya" $jDD]Bullet Wijaya$Provision of health and family planning services offered through the private sector increased.  c)USAID has had a major impact on improving the knowledge, utilization and quality of family planning  c)services in Indonesia. Knowledge of modern family planning methods is almost universal, and over  c)l55% of married women are now using contraceptives. Onethird of these women rely on clinical  c)=methods which provide longterm effectiveness. USAID programs have renovated facilities and funded  c)the medical training of thousands of physicians and midwives. Innovative interpersonal and media  c)communications efforts have increased the knowledge of millions of Indonesian couples about the  c)economic, social and health benefits of family planning. A particularly noteworthy accomplishment  c)is that USAID has been the major donor to expand the capacity and use of family planning services  c)delivered through the private sector. In just five years, the proportion of people obtaining services and  c)contraceptives from private physicians and midwives has doubled, from 12% in 1991 to 28% in 1994.  c)>The government would like this proportion to increase to 50% in the next five years. Given the huge  c)and growing numbers of clients who need services, the government recognizes that greater provision  c)of private sector services will lessen the burden on its budget and, in the long term, will help the  c)kprogram to be more sustainable. In recognition of Indonesia's worldrenowned success in the family  c)planning sector, USAID will focus its efforts in the next four years on the areas of service delivery,  c)\clinical training, communication and institutional development to achieve an orderly phaseout of direct USAID family planning assistance.  c)Indonesia is challenged by an accelerating HIV/AIDS epidemic which threatens to erode the resources  c)>which are available for other urgent health problems. USAID is successfully coordinating with other  c)donors to assist the Ministry of Health to formulate effective national HIV/AIDS policies and to develop  c)and implement a national HIV/AIDS strategy. Assistance provided by USAID also is being used for data  c)collection to monitor the prevalence of the disease in highrisk areas. Since Indonesians are largely  c)unaware of how to prevent the spread of this disease, USAID also has initiated activities on prevention  c)policies, patient counseling and information and communication. While USAID bilateral efforts in this  c)sector are relatively new, significant progress has already been made. The government has issued two  c)new national AIDS policies, one on condom promotion and one on care for AIDS patients. National"h)0*0*0*z+"  c)health resources allocated to HIV/AIDS have increased substantially. USAID has played a critical role  c)zin helping the government to develop an appropriate strategy. A national discourse on HIV/AIDS has  c)?begun, and a range of prevention and care issues is now being openly discussed almost daily in national fora and the media.  c)USAID also assists the Ministry of Health to reduce the unacceptably high levels of maternal mortality.  c)NAn extensive national midwife training program has begun, to which USAID will provide essential  c)ktraining in lifesaving skills. To strengthen the capability of the National Midwives Association, USAID  c)provides management assistance. Two pilot activities are underway to test innovative service delivery  c)interventions in Kalimantan province, and to provide small loans to private midwives to enable them to set up or expand their private practices.  c)USAID funding of a promising health sector financing trial activity will enable the Indonesian  c){government to learn from an innovative managed health care scheme targeted to serve the health  c)needs of lowerincome families. Other donors have expressed interest in helping to expand this model on a large scale throughout the country.   }KH -#J2PQͷP#  }K-#J2PQͷP# Agency Goal: Protecting the Environment  Strategic Objective 3: Decentralized and Strengthened Natural Resource Management  Strategic Objective 4: Strengthened Urban Environmental Management  c) Indonesia's natural environment is the most diverse of any country in which USAID works. It is also  c)among the most threatened. Rapid industrialization and urbanization are placing great pressure on the  c)country's natural resources, resulting in depletion of the resource base by the extractive sectors, and  c)>degradation of the quality of water and air resources by the industrial sector, power generation and  c)urban centers. Indonesia's urban environmental crisis is unique among countries receiving USAID  c)assistance, because of the size of the Indonesian population, the speed with which it is concentrating  c)zin cities, and the adverse impacts of rapid industrialization. It is estimated that by the year 2004, 60% of the entire population (155 million people) will reside in urban areas.  c)USAID's environmental objectives are to strengthen natural resources and urban environmental management. Four natural resourcesrelated achievements are expected:  Bullet Wijaya" $\D]Bullet Wijaya$Stakeholder participation in the management and monitoring of natural resources increased,  Bullet Wijaya" $o]D]Bullet Wijaya$Natural resources policy development and implementation improved,  Bullet Wijaya" $^D]Bullet Wijaya$Environmental nongovernmental organizations strengthened, and  Bullet Wijaya" $^D]Bullet Wijaya$Conservation and pollution reduction efforts by natural resourcebased industries increased.  c)OCurrent government efforts to solve environmental problems have been through a centralized  c)1commandandcontrol approach. Popular preference for communitybased, natural resource  c)management conflicts with such centralized control. USAID's challenge is to successfully promote the  c)government's working together with NGOs on environmental issues and to promote policies supporting a less centralized approach. USAID also will continue to strengthen and finance key NGO initiatives.  c)1During the past year, USAID realized important gains in rallying NGOs, local governments and  c)\communities to change natural resource polity and policies throughout the archipelago. For example,  c)concerned local governments recently approved precedentsetting agreements which restored historical  c)kforestuse rights to indigenous communities. This will allow some of Indonesia's poorest households  c)to once again undertake legal and sustainable incomegenerating activities in the government forest"h)0*0*0*z+"  c)lands surrounding their communities. USAID is promoting the use of ecotourism as an incentive for community participation in protecting the environment.  c)Furthermore, NGOs strengthened with USAID assistance are now playing a more effective role in  c)/engaging local communities in the planning and execution of effective conservation activities across  c)the archipelago. One such case involved the development of a participative planning and management process in one of Indonesia's principal marine parks.  c)USAID was successful in establishing and endowing the Indonesia Biodiversity Foundation, an  c) independent institution which will assume increasing importance in biodiversity conservation efforts  c)in the years ahead. USAIDfinanced experts and policy studies are being used by the government in  c)developing the policy framework which will guide natural resource investment in the next fiveyear government plan. USAID's objective to strengthen urban environmental management anticipates three key outcomes:  Bullet Wijaya" $hD]Bullet Wijaya$Access by urban populations to clean water increased,  Bullet Wijaya" $uiD]Bullet Wijaya$Industrial pollution emissions reduced, and  Bullet Wijaya" $ jD]Bullet Wijaya$Environmentally sound industrial processes adapted and more widely adopted.  c)Over 11% of infant deaths in Indonesia are related to waterborne disease. Industrial polluters go  c)Llargely unchallenged. Rapid increases in energy demand are straining the resources of the government  c)and have placed severe pressure on the environment. While most donors will continue to finance  c)muchneeded infrastructure projects, USAID will focus on the financial policies and organizational  c)frameworks necessary for Indonesia to expand its urban infrastructure investments, to reduce industrial  c)pollution, and to generate more energy in a cleaner fashion. USAID's approach will rely both on  c)/national policy formulation and on networks of local decisionmakers and community groups that will  }K-remain in place after USAID activities cease.   c)Progress has been achieved in increasing access by urban populations to clean water. This reflects  c)the degree to which the government accepts USAID recommendations regarding policies and practices  c)ynecessary for increasing the flow of resources to local governments for urban infrastructure purposes.  c) For example, the government has approved the establishment of a secondary mortgage facility and  c)zthe promotion of municipal bonds to finance water supply investment. Through several pilot projects,  c)>USAID technical assistance was indispensable in the effort to privatize several urban environmental  c)services. In one case, USAID assisted in the decision to use buildoperatetransfer financing for a $60  c)million bulk water supply project. As a result, poor urban residents in Jakarta and several other cities  c)are receiving more piped water and better urban environmental services (especially wastewater  c)handling, water supply, and solid waste disposal and processing). In addition, USAID has persuaded  c)the government to seek support from other donors to continue and extend the reform agenda in these  c)areas. To date, the ADB and the Overseas Economic Cooperation Fund (OECF) of Japan have agreed to contribute substantial funding.  c)Industrial pollution emissions have registered reductions in 1995, as measured by the number of firms  c)that meet pollution emission standards set by the government's environmental protection agency. The  c)1995 data show that 93 firms have met the new pollution standard. The number of firms voluntarily  c).participating in the evaluation program is rising (over 200 have registered), and the number of approved  c)\firms is likely to rise as well. USAID's training and assistance for firms in the domestic environmental consulting industry is expected to support future progress in this area. "'0*0*0*)"Ԍ c)Environmentally sound industrial processes are being adopted more widely, as measured by a  c)substantial increase in installed electrical generating capacity that makes use of renewable energy  c)resources. However, recent data indicate that energy consumption remains high, suggesting that  c)substantial challenges still lie ahead for efforts to increase energy conservation and to extend efficiency improvements.  c)By 1997, USAID's assistance to factorylevel, pollution prevention will have demonstrated its  c)advantages to manufacturing companies and its marketability to the private consulting, engineering  c)sector. In the second phase of its clean industrial strategy, to be started in FY 1997, USAID will assist  c)the GOI to strengthen its industrial pollution policies and their enforcement. Specifically, USAID will  c)assist the GOI to establish positive policy incentives for clean industrial production in existing factories  c)?and new investments, and to improve regulatory enforcement through assistance to government agencies responsible for industrial pollution abatement. #hxP7ͷP#  }K -#J2PQͷP# #J2PQͷP#Agency Goal: Building Democracy  }K - #J2PQͷP# Strategic Objective 5: Increased Effectiveness of Selected Institutions which Promote Democracy  c)The pace of democratization in Indonesia has not paralleled its rapid progress in economic growth. A  c)Nwellinformed, fully participatory citizenry is a critical element for Indonesia's future development.  c)>Internal and international pressure for significant political and judicial reform a less centralized and  c)more open, participatory and transparent government, and an independent judiciary is increasing.  c)lIndonesian civil society has become more politically active and assertive in expressing its diverse  c)interests. Demands are growing for more freedom in political competition, for greater adherence to  c)Indonesia's laws and international human rights standards, for a more accountable government and for increased equality of opportunity and equity in development.  c)MUSAID's strategic objective of increasing the effectiveness of institutions which promote democracy has three specific outcomes:  Bullet Wijaya" $D]Bullet Wijaya$NGO advocacy for democratic participation increased,  Bullet Wijaya" $8D]Bullet Wijaya$Activities that promote ruleoflaw increased, and  Bullet Wijaya" $ׂD]Bullet Wijaya$Capacity, reliability, and responsiveness of selected NGOs enhanced.  c)USAID is the largest and most influential donor in this controversial sector. Indonesian and U.S. NGOs  c)supported by USAID are among the leading institutions in helping to build a stronger civil society,  c)pressing the GOI for systematic democratic reform and assisting the GOI to devise new laws and policies.  c)Almost all landmark legal cases are pursued by the Indonesian Legal Aid Society, USAID's largest local  c)grantee, or its allied NGOs. Over the past year, cases of national importance have focused on farmer  c)}land titles and compensation relative to GOI infrastructure projects and forestry and mining  c)concessions; freedom of expression as restricted by GOI newspaper licensing regulations and  c)1mandatory accreditation of journalists; and freedom of association limits curtailing labor union formation and meetings of five persons or more.  c)NGOs, supported by USAID, have worked with the GOI to improve policy formation. Improved labor  c){law and legislation for a new dispute resolution mechanism and conservation practices are direct  c)kresults of NGO involvement. In addition, NGOs have advocated for issues as diverse as the removal  c)of the expolitical detainee symbol on national identification cards to a reduction in telephone rates.  c)jThe awareness and involvement of the National Human Rights Commission on various issues have been  c)_heightened by the activism of the NGOs. The Ministry of Justice, with USAID support, has"h)0*0*0*z+"  c)kstandardized, indexed, and distributed over 6,500 laws and regulations by CDROM disks to facilitate the administration of justice and increase the availability of legal information.  c)USAID also operates in politically sensitive geographic areas, including East Timor, Irian Jaya and Aceh.  c)kIn East Timor, one NGO grantee organized the first GOINGO consultation; this resulted in a provincial  c)/government policy on NGOs in the development of the province. The National Cooperative Business  c)zAssociation, a U.S. private voluntary organization played an influential role in helping to end a coffee }Kx-buying cartel in East Timor.  c)IXndonesia has far to go before it reaches the levels of democracy existing in other Asian countries  c)assisted by USAID. Through modest investments, USAID is significantly contributing to a more pluralistic society and a freer political system in Indonesia.X " 0*0*0*| "  }K- 'INDONESIA  }K-uFY 1997 PROGRAM SUMMARY #SxP7MP#у ($000) h ddx !ddxJ 88 h    &&  J"C )_ Encouraging - Economic 4 Growth"Stabilizing Population Growth"Protecting qthe QEnvironment"HBuilding AsDemocracy"rProviding ;HumanitarKian Assist."8!  Total  J &&  USAID Strategic Objectives#i#L#"#zD##$"   & &  1. Sustained Economic Growth in the Transition from Economic Development Assistance to Development Cooperation$ e#i i i i i S6,880 i #L #" #zD # #$" $" $" $" $" !6,880 $"   & &  2. Improved Health and Reduced Fertility#i i#L |26,713#"#zD##$"   26,713 z   &v&  3. Decentralized and Strengthened Natural Resources Managementv#iv#Lv#" "  8,582v#zDv#v#$" $" !8,582z z  &vv&  4. Strengthened Urban Environmental Managementv#iv#Lv#" "  8,582v#zDv#v#$" $" !8,582z   &v&  5. Increased Effectiveness of Selected Institutions which Support DemocracyX#iX#LX#"X#zD zD zD zD d5,900X#X#$" $" $" $" !5,900    &&  Total Development Assistance\#i S6,880\#L |26,217\#"  17,164\#zD d5,900\# 0\#$"   56,657  X `h(#mUSAID Mission Director: Vivikka M. Molldrem " 0*0*0*Q"  }K-#ixP7ͷP#> ACTIVITY DATA SHEET ă   }K- PROGRAM: INDONESIA  }KX- TITLE AND NUMBER: Sustained Economic Growth in the Transition from Economic Development Assistance to Development Cooperation, 497SO01  }K- STATUS : Continuing  }K- PROPOSED OBLIGATION AND FUNDING SOURCE : FY 1997: $6,880,000 DA  }Kx- INITIAL OBLIGATION : FY 1996; ESTIMATED COMPLETION DATE : FY 2002   }K- c)Purpose: To strengthen open markets by fostering continued economic policy reform and by expanding Indonesian access to counterpart organizations in the United States.  }K( - c)lBackground: Indonesia presents a major commercial opportunity for U.S. investment thanks to the  c) increased openness of its economy and favorable economic conditions. The size of the Indonesian  c)keconomy already larger than Canada, South Korea or Thailand creates enormous complexities and  c)difficulties for its management. Remarkable economic progress has been made over the last thirty  c)0years. However, the human capital and institutional framework on which this progress is based  c)zremains thin, particularly as problems and their solutions become ever more complex as the economy  }K- c) continues to expand. U.S. technical assistance can still make significant contributions to Indonesian  c)economic management as the country moves toward consolidating and expanding upon its gains of  c)the last thirty years. However, such assistance must be carefully targeted and the means for delivery  c)must now be altered to account for the changing development status of the country. Two principal  c)?threats to continued economic growth and progress in Indonesia are: 1) the potential for a rise in  c)/protectionist sentiment which, if realized, could undermine the efficiency and competitiveness of the  c)economy and also threaten export and investment opportunities for the United States and other  c)Ncountries; and 2) continued barriers to domestic economic competition that limit the broadening of  c)>participation in the benefits of economic growth. Activities encompassed by this strategic objective,  c)including those under the Agriculture and Rural Sector Support Program (ARSSP), the Agribusiness  c)Development Project, the Economic Law and Improved Procurement Systems Project, and the Mission's  c)microenterprise program will be targeted on these primary threats to the prevailing economic paradigm.  c)Additionally, one final activity will be established to assist in strengthening and developing new  c)linkages between institutions and constituencies in the United States and Indonesia with mutual  c)interests in key economic problems. The objective is to so promote and support such linkages and  c)0alliances that there is sufficient interest by both parties to pursue their agendas in support of the current economic paradigm even after U.S. Government assistance has ended.  }K- c)USAID Role and Achievements to Date: USAID's technical assistance for improved economic  c)management has continued to be utilized effectively by the GOI. Among donors, the United States  c)stands foremost in its ability to promote policy change that positively impacts on Indonesia's overall  c)economic performance as well as U.S.Indonesia trade and investment potential. Recent progress  c)zincludes an upward revision in macroenconomic growth targets from 6.25 percent to 7.1 percent per  c)annum, passage of a new Capital Markets Law, passage of a new Corporation Law, establishment of  c)a new bond rating company, creation of a secondary mortgage facility, and implementation of a major  c)trade liberalization program. Weighted average import tariff rates have declined from 22 percent in  c)1990 to 15 percent at the end of 1995. Also, with USAID involvement, shares of a major stateowned  c)enterprise (Indosat, a telecommunications company) were floated simultaneously on the New York and Jakarta stock exchanges.  }KH&- c)?Description: Over the next two years, USAID will continue to use a blend of technical assistance  c)contracts and grants to support continued improvements in openness and competition in the Indonesian  c)economy, issues which directly affect growing U.S.Indonesian business and economic relationships.  c)Using existing activities of the ARSSP, Agribusiness, Economic Law and microenterprise programs, the  c)Mission will seek to (1) improve the policy environment for continued economic growth; (2) codify key"h) 0*0*0*z+"  c)policy changes in updated law and regulation and work to assure that these new laws are widely  c)available to the public; and 3) work with a limited number of institutions to assure that such policies,  c)Llaws and regulations are actually used to promote openness and competition. Concurrently, a fiveyear  c)program will be developed which emphasizes the forging of new partnerships between Indonesian  c)organizations and U.S. counterpart groups in sectors of mutual interest regarding economic reform.  c)=Activities will be cofunded with a strong private sector participation. This approach will ensure private  c)\sector involvement in the transition from development assistance to development cooperation. Well c)placed support for selected Indonesian associations to access U.S. knowhow and expertise will buoy  c)sustained economic growth and help accelerate Indonesia's entry into the ranks of the "newly industrialized countries" during the first quarter of the 21st century.  }K- c)Host Country and Other Donors: Host country involvement now includes more than eight GOI ministries  c)and agencies. However, future assistance will also encompass new linkages with private sector and  c)\nongovernmental organizations. USAID has long been the preeminent donor in the economic reform  c)>sector, often piloting reforms that were later expanded by the World Bank or the Asian Development  c)Bank. An example is USAID's work in the financial market sector which is now being followed up  c)under a major IBRD loan. The size of USAID's total assistance pledge ranks seventh among the donors  c)in Indonesia after Japan, the Asian Development Bank, the World Bank, the United Kingdom, France, and Germany. The estimated host country contribution for this activity is $30,700,000.  }K- c)Beneficiaries: Partners in the economic policy reform field have included a wide range of public  c)institutions. The range of partners will now be expanded to include private institutions which either  c)wish to affect or are affected by the process of economic reform. The potential customer base for  c)such reforms is countrywide, encompassing not only members of the public bureaucracy, but also  c)private employers and employees and a wide range of consumers of both domestic and foreign goods  c)and services. Much of the thrust of the continuous process of reform to which USAID is contributing  c)yis to assure that benefits which are produced by economic efficiency are as widely shared as possible.  c)USAID is now conducting structured interviews with a sample of its customers and partners. Their  c)kopinions will contribute to the current redesign of USAID's economic growth activity which will focus  c)?on the transition from economic development assistance to development cooperation by the year 2000.  }K- c)>Principal Contractors, Grantees, or Agencies: Several institutional contractors now at work on parts  c)of the economic growth objective, including those working with the Ministry of Trade and Industry and  c){those working on economic law reform, will complete their work within a year and a half from the  c)/beginning of FY 97. The U.S./Indonesian linkages for economic growth activity will require one new  c)institutional contractor to assist in management of the program over a fiveyear period. Shortterm  c)0technical assistance from a variety of sources (universities, research centers, and professional associations) will also be required to support the new linkage program.  }K@-"@ 0*0*0* "  }K-X` hp x (#%'0*,.8135@8: ACTIVITY DATA SHEET  }K-  }K- PROGRAM: INDONESIA  }KX- TITLE AND NUMBER: Improved Health and Reduced Fertility, 497SO02  }K - STATUS : Continuing  }K- PROPOSED OBLIGATION AND FUNDING SOURCE : FY 1997: $26,713,000 DA  }K- INITIAL OBLIGATION : FY 1996; ESTIMATED COMPLETION DATE : FY 2000   }K@- c)zPurpose: To improve reproductive health by reducing the fertility rate, lowering the maternal mortality  c)!ratio, and reducing the transmission of HIV/AIDS and other sexually transmitted diseases and by improving the quality of health services among key population groups in Indonesia.  }K` - c)Background: Although Indonesia has a highly successful family planning program, use of longterm  c)contraceptive methods is still low, and its current family planning program does not reach some  c)population groups. The maternal mortality ratio remains the highest among southeast Asian countries.  c)kThe spread of HIV/AIDS is potentially Indonesia's biggest health problem. Yet, few Indonesians have  c){adequate knowledge to prevent this disease. Shrinking public resources will require a shift in the  c)burden of providing basic health care from the government to the private sector. This activity includes  c)lthe balance of programs under three prior projects: Health Sector Financing, HIV/AIDS Prevention  c)project, and Service Delivery and Expansion Support Pathfinder International. Three external  c)constraints must be overcome: (1) the leadership of the Government of Indonesia (GOI) and social  c)Mgroupings must avoid a pattern of denial in response to behavioral research findings that may not be  c)Mflattering to the Indonesian public image; (2) GOI politicians may be averse to allocating scarce public  c){funds to mount a massive public HIV/AIDS public awareness campaign when so few citizens are  c)]confirmed to have HIV/AIDS; and (3) the GOI commitment to implement national health policies that  c)rely increasingly on private sector providers may initially be weak in view of the GOI's 50year role as primary health care provider to the nation.  }K- c)USAID Role and Achievements to Date: USAID's unique contribution in the health and population  c)sector is its ability to provide high quality, short and longterm technical assistance in a number of key  c)>program areas: policy development, family planning and health care service delivery, and operations  c)research. No other donor in Indonesia provides health and population technical assistance on a  c)ysustained basis. Recent progress has been noteworthy. The percentage of married women now using  c)contraception is 55%, or approximately 20 million women. This represents a five percentage point  c)increase from just three years ago and indicates that Indonesia is overcoming its plateau in  c)contraceptive use. Total fertility also declined from 3.1 in 1991 to 2.8 children per woman in 1994.  c)MCommercial sales from the Blue Circle campaign grew steadily in prime urban markets, and nearly 30  c).percent of current family planning users received family planning services from private sector sources.  c)|In FY 1995, a national HIV/AIDS strategy was launched; national health resources allocated to  c)?HIV/AIDS increased by 40% to $3.5 million; and nearly 14% of the population in the Klaten District are participating in an integrated managed health care program.  }K - c)\Description: USAID will continue to provide advice and analysis in the family planning and health and  c)\nutrition sectors which will rely increasingly on private sector delivery of goods and services. Small  c)grants to local non governmental organizations (NGOs) will catalyze Indonesia's implementation of  c)kappropriate HIV/AIDS prevention strategies. Technical assistance will help the GOI Ministry of Health  c)assess how well pilot managedhealthcare plans are performing and how they can be expanded  c)Mnationwide. This activity focuses on reproductive health issues and intends to: (1) increase the use  c)and quality of family planning services, (2) increase the use and quality of sexually transmitted  c)disease/HIV/AIDS, and reproductive health services, (3) develop and implement national AIDS and  c)lreproductive health policies, and (4) improve the balance of public and private sector provision of  c).health and family planning services through the provision of targetted technical assistance. The private  c)Msector will have a larger role as supplier and financier of family planning services. The development"( 0*0*0**"  c)of coherent and appropriate AIDS policies will help increase public knowledge of prevention practices and encourage a more effective allocation of public funds to combat HIV/AIDS.  }KX- c)Host Country and Other Donors: The Ministry of Population and the Ministry of Health are now  c)collaborating with USAID to pursue this activity by formulating new national policies and by  c)coordinating activities. Local government offices and NGOs are already cooperating in carrying out  c)three USAIDfunded programs: an HIV/AIDS prevention program, an improved maternal health service  c)@delivery activity, and family planning activities in hardtoreach areas. Multilateral banks have  c)expressed interest in replicating the health care pilot effort, if successful. The Japan International  c)zCooperation Agency in coordination with USAID is launching an integrated health program which will  c)emphasize improved maternal mortality and HIV/AIDS prevention. USAID has always been the lead  c)?donor and advisor in the family planning sector, is the leader of the donor committee coordinating  c)HIV/AIDS, and is the only donor piloting managed health care systems. The estimated host country contribution for this activity is $16,300,000.  }K - c)yBeneficiaries: Endusers are millions of family planning service beneficiaries, expectant mothers, lower c)Lincome people who use governmentowned health facilities, and persons who practice highrisk sexual  c)behavior. Privatization of family planning activities will provide better service to endusers and will  c)make the service more customeroriented. The pilot activity on managed health care has been designed  c)to provide some cross subsidy to lower income families to ensure their equitable access to quality  c)health care. By 1998, at least 51% of the Klaten district population will benefit directly from  c)participation in the managedhealthcare program; 55% of births in the Mothercare demonstration area  c)will be attended by trained health personnel; and 60% of those persons in HIV/AIDS prevention  c)zdemonstration areas will know at least two ways of protecting themselves against HIV transmission. Approximately six million eligible couples will receive contraceptive services by 1997.  }KP- c)|Principal Contractors, Grantees, or Agencies: Contractors and grantees, such as John Snow  c)International, Futures Group, Project Concern International, Johns Hoplkins University, Centers for  c)zDisease Control and AIDSCAP, will continue their work on family planning, HIV/AIDS prevention, and  c)[health sector financing. As the activity progresses, a growing reliance on centrally funded, shortterm  c)advisors is expected. Grants to NGOs and private sector entities are used increasingly as a natural adjunct to enhancing the sustainability of an expanding reproductive health program.  }K-"0*0*0*"  }K-Major Results Indicators: s  xx (#(#2 }K-Baseline sTarget  }KX-Total fertility rate2.86 (1994) X3 }K-#ixP7ͷP#э Source:<Demographic and Health Survey; BKKBN service statistics(#Ɵs2.70 (1997) X01Í ÍX01Í ÍSyphilis prevalence rate among highrisk populations in demonstration areas: male and  }K- femaleTBD (1996) y 3 }K` -#ixP7ͷP#э Baseline data available in September 1996ysTBD (1997)i3 }K -ԍ Targets to be set or revised pursuant to baseline data analysis.i Maternal mortality ratio (maternal deaths per  }K@- 100,000 live births)450 (1992) X@@3 }K-#ixP7ͷP#э Source:<Ministry of Health's Household Survey in the National Social and Economic Survey (SUSENAS) (every three years)(#s400 (1996) "` ` 0*0*0* "  }K- > ACTIVITY DATA SHEET  }K-  }K- PROGRAM: INDONESIA  }KX- TITLE AND NUMBER: Decentralized and Strengthened Natural Resources Management, 497SO03  }K - STATUS : Continuing  }K- PROPOSED OBLIGATION AND FUNDING SOURCE : FY 1997: $8,582,000 DA  }K- INITIAL OBLIGATION : FY 1996; ESTIMATED COMPLETION DATE : FY 2005   }K- c)?Purpose: To enhance the sustainable use of Indonesia's natural resources by encouraging local  c)communities and non governmental organizations (NGOs) to participate actively in natural resource  c)policy implementation, planning, and management and by establishing a national system to monitor, analyze, and disseminate the results of these activities.  }K - c)\Background: Indonesia has the most diverse natural resource base of any USAID recipient. Blessed  c)Mwith the widest range of biodiversity and the world's richest marine resources, it has the longest list  c)of endangered species. Its tropical forests (second only to the Amazon) are disappearing at a rate of  c) nearly 1 million hectares per year. In response, the Government of Indonesia (GOI) has passed key  c)laws and decentralized the operations of its environmental management agencies. Its development  c)plans give high priority to environmental issues. This activity includes Natural Resources Management  c)and Indonesian Biodiversity Foundation. Three external constraints could adversely affect  c)achievements under this activity: (1) certain quarters of the GOI may be slow to admit that government  c)]intervention cannot solve all environmental problems through a centralized, commandandcontrol  c)Mapproach; (2) the GOI may deny USAID direct access to NGOs out of sovereignty concerns; and (3) GOI officials may be reluctant to cooperate with NGO leaders.  }K- c) USAID Role and Achievements to Date: USAID has two comparative advantages over other donors  c)Othat enable it to support strategic, complex programs at a level significant enough to influence  c)decisions about strategy and priorities. These two comparative advantages are: (1) toplevel technical  c)expertise, and (2) the ability to use grant resources flexibly. The ability of USAID to collaborate  c)>directly with NGOs difficult or impossible for most donors is an invaluable contribution that greatly  c)enhances USAID's role in natural resource management (NRM) in Indonesia. Recent progress includes  c)startup of two large, potentially influential, independent NGOs: the Ecolabelling Institute and the  c)Indonesia Biodiversity Foundation. The GOI began testing the policies and providing the guidance to  c)Maccelerate the devolution of natural resource management to the local level over the next five years;  c)Indonesia led the effort to support marine resource management in the Biodiversity Treaty Conference  c)!of Parties II held in Jakarta, pledging to promote decentralized and strengthened marine resource  c)management; and the GOI enacted laws to prohibit the export of endangered marine species and to reduce fishing practices that destroy coral reefs.  }K - c)Description: USAID will work with GOI and NGO counterparts to promote greater community  c)involvement in natural resource management. Pilot activities located throughout Indonesia, such as  c)0the already successful Park Management Plan at Bunaken National Park in Sulawesi, will provide  c)kinformation valuable in formulating national policy options in the natural resource management sector.  c)!This activity intends to promote: (1) greater stakeholder participation in decisions about planning,  c)!management, use, and monitoring of natural resources; (2) increased conservation and pollution  c)zreduction by natural resourcebased industries; (3) improved policy development and implementation;  c)and (4) strengthened institutional capacity for biodiversity conservation. Improved policies, practices,  c)and enforcement will help regulate industries that currently practice unsustainable harvesting, farming,  c)and fishing techniques. By strengthening the capacity of NGOs, Indonesian professionals will be able to train community groups to become effective in managing their own local natural resources. "(0*0*0**"Ԍ }K- c)\Host Country and Other Donors: The GOI's Ministry of Forestry is a key host country partner. USAID  c)is providing communitybased management models for other donors. Multilateral banks, bilateral  c)Ldonors, and international research centers support Indonesia's forestry conservation. The Government  c)of Japan, the United Nations' Global Environmental Fund, and multilateral banks contribute to  c)zbiodiversity conservation efforts. Selected private sector entities and NGOs also will pool resources  c)to pursue this activity. USAID provides leadership to the donor community in the formulation of  c)forestry policy with the active support of Canada, Finland, and Japan. The estimated host country contribution for this activity is $24,500,000.  }K- c)kBeneficiaries: Direct endusers are: (1) the rural citizens of Indonesia's tropical forests who receive  c)]natural resource management training that will increase their incomes; (2) Indonesia's network of  c)environmental NGOs; (3) universities who provide professional assistance and training for natural  c)resource management; and (4) owners of natural resource companies that will be more efficient. It is  c)estimated that onethird of Indonesia's population (i.e., 65 million people) are dependent upon forest  c)resources. Their welfare will be substantially improved by the success of this activity. Similarly, there  c)are approximately 16 million people employed in fishing activities whose livelihood is directly dependent  c)0on the health of coastal and marine ecosystems. They, too, will benefit from the success of this  c)=activity. Indirect beneficiaries are (1) the future generations of citizens whose use of natural resources  c)kwill be more sustainable, and (2) those outside Indonesia who will benefit from the cooling effects of forest preservation.  }Kh- c)Principal Contractors, Grantees, or Agencies: The activity will be implemented through a variety of  c)complementary instruments: (1) a partnership of key GOI ministries (Environment, Forestry, and Home  c)Affairs), local NGOs, Indonesian universities, and local governments with U.S. environmental NGOs  c)(World Wildlife Fund, the Nature Conservancy, World Resources Institute, Conservation International);  c)?(2) the ongoing Biodiversity Support Program, (3) a cooperative agreement with the University of  c)?Rhode Island; and (4) technical assistance through a competitively awarded contract with a U.S. consulting firm. "0*0*0*"  x (#%'0*,.8135@8: