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MEMORANDUM OF UNDERSTANDING
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF AUSTRALIA
RELATING TO THE BANK INDONESIA-ASSISTANCE
TO THE SMALL ENTERPRISE DEVELOPMENT PROJECT

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GENERAL

1 . THIS MEMORANDUM expresses the under standing of the Government of the
Republic of Indonesia and the Government
of Australia concerning the responsibili ties and contributions respectively of
the two Governments in regard to The Bank
Indonesia Assistance to The Small Enterprise Development Project ( hereinafter

referred to as the Project ) located in
Jakarta , Semarang and Yogyakarta which is
intended to improve the capacity of Banks
to administer credit schemes designed to
assi st in the development of small
Indonesian enterprises as further described
and detailed in Annex 1 to this Memorandum .

AUTHORITIES

2 . The Executing Authorities for this Project
will be

For the Indonesian Government : Bank mdonesia
For the Australian Government : The Australian
Development Assistance Bureau of the Department of Foreign Affairs .
The Australian Development Assistance
Bureau may nominate suitably qualified
agents to undertake any part of its
functions on iLs behalf .


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DURATION

3. This Memorandum will take effect from the
date of its signature and the Project will
be deemed to have commenced from that date.
The Australian constribution to the Project
and all undertakings given herein will
cease on 30 June 1985 or on such other date
as may subsequently be arranged between the
two Governments.

PROJECT
ORGANISATION

4. A Project Co-ordinating Board, whose

chairman will be appointed by the Indonesian
Government will be established .
Membership of the Board will include the
Australian Team Leader, who is to be
appointed by the Australian Government in
consultation with the Indonesian Government.
Membership of the Project Co-ordinating
Board will also include the Indonesian Project Manager who will be appointed by Bank
Indonesia and representatives of Bank Indonesia referred to in Clause 2 above, or
nominated at the discretion of the Indonesian
Government, as well as a nominee designated
by the Australian Embassy, Jakarta. The Board
will meet not less than twice each year .
5. Function of the Project Co - ordinating Board
will include :

RESPONSIBILITY

(a)


reviewing and reporting on progress to
the two Governments; and

(b)

recommending to the two Governments
changes in program, budget and future
development.

6. Overall responsibility for this Project will
rest with the Government of Indonesia .

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The final authority for decisions on
implementation of the Project shall rest

with Bank Indonesia after considering
consultations between the Indonesian and
Australian Project Managers, specifically
for matters of principal importance which
require such consultations .
CONTRIBUTIONS

7 . The contributions of the Indonesian and
Australian Governments are detailed in
Annex l and are estimated to value
Rp . 900,000,000 and $A.2 ,100,000 respectively .
Disbursement of the Australian Government's
contributions will be subject to the normal
parliamentary approval of annual aR%opriations
and the Indonesian Government's contribution
will be subject to normal annual budget
appropriations.

EVALUATION


8. An evaluation of progress of the Project
may be made after completion of year two
and at a time mutually convenient to the
Indonesian and Australian Governments .
Such an evaluation would be undertaken by
a joint investigation team appointed by
the two Governments and independent of
the staff directly involved in the Project .

PERSONNEL

9. For the purposes of this Project, the
Indonesian Government will, in accordance
with prevailing law and regulations,
facilitate the employment by the Australian
Government or its agent of personnel as
required for the Project and established
between the twn Governments by :

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(a)

(b)

(c)

(d)

(e)

SUPPLIES

10. (a)

(b)


granting exemption from income or
other taxes on project salaries and
allowances;
granting exemption from import and
other duties on personal and household
effects;
granting exemption from taxes and duties
on the purchase in Indonesia of a locally
assembled motor vehicle per expert on
condition that it either be re-exported,
sold to a person who has the same
privileges, or duty paid on its assessed
value at time of sale within Indonesia .
The expert's assignment should be on a
long term basis of at least twelve (12)
consecutive months period;
granting to 1\ustralian project :r:ersonnel
all rights and entitlements accorded to
the aid personnel of any other donor

country; and
expediting the issue of all documentation required for the entry of, and
performance of work by, project
personnel, including work permits or
certificates for eligible persons.
The Indonesian Government will, in
accordance with prevailing laws and
regulations either exempt from import
duties and other taxes or pay such
duties on all goods supplied for the
Project,;
The Indonesian Government will
facilitate movement of project equipment
and l:SUppl.i.t:::; l.>y p.tvvlding appropriate
customs and wharfage facilit ies in the
port of entry and will be responsible

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for the expeditious transport of such
equipment and supplies to the site; and
(c)

LIABILITY

Project equipment and supplies provided
by Australia will be available for the
unrestricted use of the Project and
shall not be withdrawn from such use
without the consent of the Project coordinating Board. The Australian Project Manager in consultation with the
Indonesian Project Manager shall
exercise administrative control over
such supplies for the duration of the
Project .

11. The Indonesian Government will be responsible for dealing with any claims which

may be brought by third parties against
Australia and its experts, agents or
Australian personnel and will hold harmless
Australia and its experts, agents and
personnel in case of any claims or liabilities
resulting from operations under this
Memorandum.
This provision will not relieve any person
from liability for any criminal, grossly
negligent or fraudulent act .

SECURITY

12. The Indonesian Government will arrange for
any protection deemed necessary to ensure
the safety of Australian personnel, project
and personnel equipment both at the project
location, in transit in Indonesia and on
any other official representational activity
in Indonesia.
The Australian Government will take reasonable
precautions to ensure that Australian perscrmel
have due regard for local traditions and
customs.

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SETTLEMENT OF
DIFFERENCES

13. Any disputes arising out of the inter pretation or implementation of the
Memorandum shall be settled amicably by
consultation or negotiation between the
two Governments .

AMENDMENTS

14 . Amendments to this Memorandum may be
made at any time by an Exchange of
Letters between the two Governments.

ANNEXURES to this Memorandum form an integral part of it .
SIGNED

at

Jakarta,
1983 .

in duplicate , this

FOR THE GOVERNMJfNT OF
THE REPUBLIC OF INDONESIA

Signed
ARIFIN M.SIREGAR

Signed
KAMAROY ARIEF

The Board of Managing Directors
BANK INDONESIA

I

day of

FOR THE GOVERNMENT OF
AUSTRALIA

Signed
F. RAWDON DALRYMPLE
Ambassador

ANNEX

1

BANK INDONESIA - SMALL ENTERPRISE DEVELOPMENT PROJECT

A.

Objectives

Bank Indonesia has devised two development credit schemes
to finance fixed assets and to provide working capital credits
with lower interest rates and easier loan conditions than
credit available in the commercial market. The schemes will
assist in the development of small Indonesian enterprises ,
thereby creating employment, increasing the geographic dispersion
of economic activity, developing managerial and technical skills
amongst economically weak groups and promoting the equitable development of productive activity throughout the country.
B.

The Australian Government will provide
(a)

Staff
- consultancy teams with sufficient professional and
technical skills to continue the- provision of consultancy assistance to the Regional Project Management
Units (RPMU) at Semarang (two Expatriate Consultants)
and Yogyakarta (one Expatriate Consultant) for the
period 1 July 1981 to 30 June 1984;
- suitably qualified expatriate staff consisting of three
Consultants to provide training assistance to LPPI
(Bank Indonesia Training Institution) and one Consultant to be attached to Bank Negara Indonesia 1946
(BNI 1946) for a period of three years .
- short term consultancy assistance for economic surveys
consisting of a minimum of nine months.

(b)

Services
- consultancy assistance to RPMUs at semarang and
Yogyakarta through :

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(i)

(c)

the preparation and implementation of a work
program in development economics, developing
banking, financial analysis and staff development;

(iil

project identification and feasibility studies;

(iii}

the preparation and implementation of special
projects in the region including hire purchase
schemes, leasing schemes, technical pilot projects etc;

(iv)

the functional transfer of knowledge and experience in developing banking, development economics and financial analysis to assigned
counterparts and other bank staff .

Training
in house training of Indonesian personnel
attached to RPMUs at Semarang and Yogyakarta
and at various training institutes in Jakarta,
including LPPI and BNI46. Training will be
directed towards staff and materials development.
Training in Australia will be provided where
appropriate, for Bank Indonesia as well as
handling bank staff involved in this project .

(d)

Expatriate Costs
salaries and allowances, airfares to and from
Australia and within Indonesia and residential
accommodation and expenses in Indonesia for
all Australian staff and families;

(e)

Economic Surveys
short term consultancy assistance consisting of
a total of nine months for the preparation of
two economic surveys for the promotion of small
credit programs; and

(f}

Vehicles
a suitable number of vehicles for each team in
Semarang, Yogyakarta and Jakarta.

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c.

The Indonesian Government will
· (a)

Staff
provide Indonesian Consultants and sufficient
staff for

the

RPMU and the training aspects

of the Project on a full-time basis including
payment of all salaries, allowances and housing
costs .
and

Staff will be sufficiently

experienced to be

qualified

part of a counterpart

operation:
(b)

Accommodation
provide suitable office accommodation and other
adequate facilities in Jakarta (Bank Indonesia,
LPPI and BNI 46), Semarang and Yogyakarta.

(c)

Secretarial Assistance
provide sufficient secretarial support assistance
for Project personnel as is necessary;

(d)

Training Material
purchase relevant literature , provide printing
and compilation

facilities

and

distribute

training materials and reports;
(e)

Training
provide suitable facilities for conducting
training courses ,

seminars and workshops,

including classrooms, audiovisual equipment,
teaching aids etc.
(f)

Transport
provide a sufficient number of vehicles (

or

other means of transportation ) and drivers for
Project personnel and together with the
running

costs,

maintenance

including tuel

and repairs to

セウ。イケ@

and lubricants,

project vehicles,

including vehicles supplied by Australia .