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BACKGROUND

In the National Medium-Term Development Plan (RPJMN: Rencana Pembangunan Jangka Panjang Menengah Nasional) 2010-2014, Indonesia prioritized the improvement of human resource capacity building, including the strengthening of economic competitiveness as well as improvement of mastery in science and technology. To increase the welfare of the people, Indonesia has focused the development of its economy based on several areas of competitive advantage, including its wealth of natural and human resources, and its rich national culture. To achieve these goals, Indonesia strengthens three pillars of development strategy: pro-growth, pro-jobs, and pro-poor, in an inclusive and fair development.

Along with the development strategy, the government has welcomed the opportunity to compete in the Compact competitive grant run by the Millennium Challenge Corporation (MCC) of the United States of America. The cooperation opportunity has been made possible because the Government of Indonesia and MCC have a similar mission to reduce poverty. The mission of MCC is to reduce poverty through sustainable economic growth.

In 2007-2009, Indonesia received a US$55 million grant from the MCC Threshold Program, which was considered successful in financing immunization and anti-corruption programs. The successful program qualified Indonesia to participate in the competition for the Compact grant program.

MCC Compact Grants must be obtained through competition with other countries. In the fiscal year 2009, three countries fulfilled MCC requirements to be Compact program grantee candidates: Indonesia, Zambia, and Colombia. Indonesia then won the competition to receive this five-year grant. The Compact grant is the largest commitment of the United States of America in the last three decades in Indonesia.

On 19 November 2011, the Millennium Challenge Compact Grant Agreement was signed by both parties in Bali. Secretary of State Hillary Rodham Clinton represented the U.S. Government, while Finance Minister Agus D. W. Martowardojo represented the Government of Indonesia. The grant, which supports the Comprehensive Partnership of U.S. and Indonesia, was first implemented in 2013 and will end in 2018.