Economic Criteria for Eligible Project

MCA-Indonesia and MCC use economic analysts in the evaluation of each proposed project in order to help answer various questions about a project’s impacts on society and on project stakeholders. The same tools also identify project’s risks and assess its long-term sustainability.

Specfically, the benefits of these tool are:

  1. Determine the execution of a project.
  2. Estimating its fiscal impact.
  3. Ensure the arrangements for cost recovery are efficient and equitable.
  4. Assess potential environmental impacts and their contribution to poverty reduction.


What is ERR?

The ERR is used as a summary statistic to illustrate the economic justification for the proposed investments based on its projected economic benefits. The ERR serves as a project impact measure against material living standards for project stakeholders, taking into account the absolute value of costs and benefits over time.

The ERR calculation uses a “discount rate” indicating the present value of the expected net income in the early stages of the project. Economic benefits are about social socts and benefits. The higher the value of benefits relative to cost, the higher the ERR.

Inclusion of Environmental Impact for Green Prosperity Program

MCA-Indonesia believes that the environment is not only an object to be protected, but also a key factor in the production of economic benefits and avoidance economic costs. The Green Prosperity Project promotes the linkage between economic investment and environmental resources.

The estimated value of environmental benefits depend heavily on the valuation approach used in determining selection ctiteria.



Environmental and Social Performance

Through its project activities, MCA-Indonesia aims to maximize environmental and social benefit for the people of Indonesia (including women, indigenous people and vulnerable groups), and to minimize the adverse impacts to society and the environment. To ensure this, all MCA-Indonesia activities shall comply with the MCA-Indonesia Environmental and Social Management System (ESMS) Framework.

The ESMS Framework is based on environmental laws and regulations of the Government of Indonesia, MCC Environmental Guidelines, MCC Gender Policy, and the international Finance Corporation Performance Standards on Environmental and Social Sustainability. In order to receive project funding, these environmental and social safeguards must be integrated into the design and implementation of all projects, and project components, in a manner that meets all of the MCA-Indonesoa ESMS Framework and MCC approval.



Social and Gender Inclusion

MCA-Indonesia requires the implementation of the Compact Social and Gender Integration Plan (MCA-Indonesia SGIP) and consolidates all relevant projects and proposed activities on the subject of gender and vulnerable people to ensure their involvement and participation both in equal access and benefits. SGIP is an operational tool for systematizing and ensuring social inclusion and integration of gender equality across Copact projects and activities.

The Environmental and Social Performance (USP) unit shall work together with the Social and Gender Inclusion (SGI) unit for social and gender-related risks and incorporation of gender-related issues into the safeguards and mitigation measures of the Compact including in Green Prosperity Projects.

Initial recommendations and issues have been incorporated into ongoing project plans, terms of reference, bidding documents, and other project documentation and arrangements, with specific funds set aside to ensure resources and technical inputs within each project activity. In addition, several cross-cutting gaps and inequalities have been identified at the policy, institutional and community levels, which may impact marginalized groups and women’s ability to participate in and benefit from Compact project activities.

The complete document can be downloaded here.