A.l.D. PROJEC1 NO. 497-C329
A. I . D. LOAN NO. 497-W - 073
LOAN NO.
ＴｾＷ Ｍ ｔ Ｍ ＰＷＰ＠ ｌｏｾ＠NO. 497-T-07GA
LOAN NO. 497- T- 094A
.AMENDMEN'l NO. 2 TO
LOAN AC:.REEMEN'!'
BE1WEEN
THEREPUBLIC OF INDONESIA
ａｾｄ＠
THE
UNITED
STATESOr .AMI:RH.A
FOR
FRHA1'E
SEC10R
DEVELOIMENT
Dated: August 28 , 1986
This 1\MENDMENT NO . 2, is entered into between the
REPUBLICOF ll'>DOl';I:.SlA
C
1Borrower
11)
and tne UNITED S1ATt;S OF ANllUCA,
acting through the
ａｇｦｵｾｃｙ＠ FOkINTERNATIONAL DEVELOrMENT
(''A.
l.l.J . II).ｗｈｌｫｩａｾ Ｌ＠
the Borrower and A. l.D . enterld into a Private
Sector Development Project Loan AgreemenL designated as A. I . D.
Loan No .
ＴｾＷ Ｍ ｗ Ｍ ＰＷＳＬ＠on September 30,
1982 ,
wnich was amendea on
June
ＲｾＬ＠1984 (
11Loan Agr eement
11) ,
whereby
1..1.0 .
agreed to lend
to the Borrower up to 1}-..ree t.Jillion Eight Hundred and Fifty
Thousand L'nited States ("U. S.
11)
Lollars
(S3
,850 ,00(;) (
11Loan
11) ;and
WrLREAS, the Borrower and A.l . D. desir€ to amend the Loan
A6reement to ada an aadi t ional
$1 , 000,000 and to make other
related changes;
N0\-1
Tlit.h.E.FOl\1:., the Borrower and A.
1.0 . hereby agree as
followE:
1 .
A
new Section
2 . 2.
Incremental Nature of Project, is
added as follows :
11
Section 2 . 2. Ir.cremental Nature of P1.oject
(a) A. l . D.
1s fur ther con t ributions to the Ptoject will be
provided in increme nts , the firs t one being made available in
accorciHnce with Section 3 . 1 of the Agreement .
Subsequent
increment {s) will be subject to tile availability of funds to
A. J.D . ior this purpose , and to the mutual agreement of the
2
-(b) Within tho overall Project Assistance ｾｯｭｰｬ･ｴｩｯｮ＠ Date
stated in this Agreement , A. l.D., based upon consultation with
the Borrower, may specify in Project lmplementation Letters
appropriate time periods for the utilization of funds loaned by
h . I . D. under an individual increment of assistance .
lt is
anticipated, subject to the conditions set forth in paragraph
(a) of this
Sec.:tion
L. . L. . ,that A.
1.1.1 .'s total loan contribution
to the Project will be up
to
$(.,b50,000 . "
' ·
The first paragraph of Section
ｾ＠ .1.of the Loan
Agreement is
ｲｾｶｩｳ･､＠to read as follows :
"5ection
:_
. l.1he Loan .
1o assist the Borrower to meet
tne costs ot carrying out tbe Ptoject, A.l.D . , pursuant to the
Eoreign Assistance Act of 1961, as amended, agrees to lend the
Borrower undet the terms of this Agreement not to exceed Four
l'Iillicn light llunared and Hfty Thousand IJnited States ("U . S. ")
Dollars ($4
Ｌｦｳｾｕ＠,000) ("Loan").
1l e aggregate amount of
disbursements under the Loan is referred to as "Principal'' .
3 .
Pbragraph (b) of Section 3 . '- · or: the Loan Agreement,
1orrower Resources for the
ｐｲｯｪ･ｾ Ｌ＠is revised
to
read as
follows :
"(b) 1 be re:sout c.es provide a by the Borrower tot tne
Project will be not less than the equivalent of
u. S. $4,100,000
incluaing costs borne on an "in - lind" basis . "
4.
Arevised Annex 1 ,
ｐｾｰｬｩｴｩ･｡＠Project Description , and
3
-5.
Except as herein above expressly amended, the Loan
Agreement remains in full force and effect.
IN
ｗｉｔｾｅｓｓ＠WHEREOF, the Borrower and the United States of
America, each acting through its
ｲ･ｾｰ･｣ｴｩｶ･＠duly authorized
representative, have caused this Amendment No. 2 to be signed
in their nanes and delivered as of the date written above.
REPUBLIC OF INDONESIA
Signed
jamal
a
Actin
General
for F
ign Economic Relations
Department of Foreign Affairs
UNITED STATES OF AMERICA
Signed
Paul Wolfowi t /
Ambassador
I
Annex 1
Private Sector Leve1opment
Amplified Project lescription - Revision 2
L ｾｭｭ｡ｲｹ Ｚ＠ This [.lroject paper amendment adds ｾＱ＠ million in loan funds to increase the amount available under the project ' s existing canponents for special studies ana consulting services and for Central Java enterprise
development activities . 1he amendment allows continuation oi work focusing
ｾ｡ｲｴｩ｣ｵｬ｡ｲｬｹ＠ on two areas : policy issues ｩｭｾｯｲｴ｡ｮｴ＠ to private sector development and consolidation and replication of experimental work being done in &lllall enterprise development
2. Hacksround: 'l'he Private Sector l't.oject (signed September 30, 1982 and
amendment June 29, 1984) tests strategies to strengthen services -- credit,
management, technology -- available to the private sector; to improve the policy environment; and to attract private resources --capital, management skills and technology -- to areas with high employment potential . 1he
Private Sector ProJect has five components: U) to facilitate new
investment in areas of high employment potential through brokering by
Indonesian firma affiliated with lJS firms to match Indonesian entrepreneurs
with potential US investor; (ZJ to establish a management Lrainin& loan
tund (now called the .i.ndonesian lxecutive Levelopment l-und) to provide
loans to indonesian companies ｩｮｴ･ｲｾｳｴ･､＠ in sending mid-level anu senior
exect.tives to the united States tor short-term training at US business
schools and internships at US companies; (3) to conduct studies in Lhok
Seumawe, an area ot highly capital intensive investment in North Sumatera,
to assess possible ways of ｩｮｴ･ｧｲｾｴｩｮｧ＠ ｣｡ｰｩｴ｡ｬＭｩｾｴ･ｮｳｩｶ･＠ industry with the
local economy; ( 4) to conduct special studies ar:ii provide consulting
services to identify and ｡､､ｲｾｳｳ＠ constraints on private sector activity;
and t 5) to assist enterprise development activities in Central Java which
arc designed Lo attract new investment to arel'ls of high employment and profit potential, to strengthen services available to the private sector and LO identify and address constraints on private sector development.
3. The .Arr.endmeut: 'the amendment provides tunds for special stuaies and
｣ｯｮｳｵｬｴｩｾ＠ services related to formulation and imple.mentation of policies
affecting private sector development such as tax, credit, investment
promotion, capital markets ､･ｶ･ｬｯｰｾｮｴＮ＠ lt will also permit additional
technical assistance in small business analysis and systems development, and short-term consulting on patticular enterprise problems such as
marketing, design, and quality control . lt will provide tunds for lhe
special studies and ｣ｯｮｳｵｬｴｩｮｾ＠ component administered b> the Jllird.stry of
Ioinance and Lo the l:entral Java comJX)nent administered by the M.nistry of
Home At tairs.
A. under Lhe special studies and consulting services component the
amendment adds funds tor follow-oil activities in tax , assistance to the
ｃＮｾ［ｮｴＮｬ｡ｬ＠ .Bank, pension reform and capital markets development :
\l) 'lax . Ｑｨｾ＠ amendment provides tunds for assistance to the
2
-a . Strategic Planning: Consulcing assistance in reviewing
Department of 1ax staff oq,anization and responsibilities and advising on reorganization and manyower development.
b. Uistrict Management: Assistance to design and conduct training for district officials and to develop a set of curriculum materials and core of trained officials for follow-on training courses .
c. Aavanced Lata Pt·ocessing: work with the Department of
1ax and the l1inistry of l"inance 's computer center to define user
requirements and develop procedural manuals, a filing system, and internal data processing forms; to advise on acquisition of new equipment; to train systems teams; to assist expansion ot the master file, to develop a
directorate-wide management information system; and to train programmers.
d. Investigations: work to develop a cadre of trained
instructors, curriculum and material for training in investigation
procedures and techniques.
e. Short-tero:.: bnort-term assistance in areas such as
collection, tonns, and audit, as requirea.
ｬｾＩ＠ Bank Indonesia: 1he amendment provides assistance to Bank
Indonesia in a number ot key operational areas identified by the Bank such
as:
a. five-year planning assist in monetary instruments.
Strategic plannin5: To link annual budgets to the
process and manpower development requirements; and to management, including the development of new monetary
b. Bank supervision: To rework the basic rating system for evaluating bank soundness and to reorient lending procedures away from collateral based lending to focus on repayment capacity .
c. Automation and computerization: ｾｯ＠ speed services to
banks, integrate accounting and data collec t.ion, improve check clearing and wire transfer systems.
d . Establishment ot a national credit file to standaraize
and ｩｮｴ･ｾ｡ｴ･＠ information from reporting banks .
t3J Pension System Development: Assistance to the Ministry of
Uuance in the development of a regulation manual and training program to
support establishment of a pension ｣ｾｮｴｲｯｬ＠ system.
t 4) 1'he amendment may also provide funds for other short-term
consultancies or special studies to address cor£traints on private sector
activity as identified during the course of the proJec L. l:.xamples might
include work with the Ministry of Finance on studies relating to capital
markets development; wi tn hKH1 on investment licensing and promotion; with
- 3
-Is. 1'ht! amendment proviaes tunds tor au additional long-term consultant, for twenty-four months, to ｾｯｲｫ＠ on business systems for
enterprises developed under the Central Java component such as shrirup, wood .turniture, rattan and wicker, metals, and to experiment ｾｩｴｨ＠ their
replication iu other areas . Specifically, the consultant would be expected to:
tlJ Assist clients to understand and conceptualize the structure ot their operations, organize a system to collect information ｾ｢ｯｯｫｫ･･ｰｩｮｧＩ＠
to analyze the data ｧ･ｮ･ｲ｡ｴ･ｾＬ＠ and forruulate business plans; from this expensive the consultant would develop a package of materials to assist other enterprises in structurink their business operations.
ｾ＠ 2) Assess the business management requirements of l'lodel Shrimp Hatcnery in terms of information collection, financial controls,
performance evaluation, and design a business management approach appro{>riate to small hatcheries.
(J) Assist the lSA}PELh/Central Java consultant developing approachs to business manage.ment assistance required to assure the
institutionalization of the project's direct assistance efforts in the private sector.
t4) Review opportunities for replication of specific project activities in other areas -- for example, examine the business potential for model hatchery development in ｾｯｵｴｨ＠ ｾｵｬ｡ｷ･ｳｩ＠ -- and develop or approach for replication .
Attachment 1
Revisea rinancial Plan Private Sector Development Project
($
OOvJAJ.IJ 1-unds Proposed
fY86 Obligation Total to Lete Life of l'rcjec t
L G L G L
c
a c. Private lnvest11ent 300* ＱＬｾＳＰ＠ 1,8JO
t1gt Training 430 430
Lhok Seumawe 500 500
Special Studies 450* ＷｾＰ＠ 1,150 750 ｾＮＹＰＰ＠ 1,500
Central Java mterprise 250 250 1,100 500 1,100 500
Contingency L.7U 20 520 270
Eva1ualion
---
50 501,000 1,000 4,850 1,750 b,850 2,750
*
l:<.eplioishinE; Facilltatin& Investment Canponent, from which S300 ,000was borrol-led for the special studies component to initiale the IRS 'lax Program.
WI
Current
180
1 , 400
180
850
40
2,650
funds
.Amended
300
1,960
300
1,350
150
40
