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WHEAT FLOUR AGREEMENT BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
UNDER THE FOOD AID CONVENTION

At the request of the Government of Indonesia, the Government of
the United States has agreed to provide assistance in support of an
approved self-help program to remove the causes of hunger and
malnutrition and to promote economic development. This program
will utilize PL480 Title II Food for Peace commodities from the
United States under the terms of the Food Aid Convention of the
International Grains Arrangement. Under this program, the net
proceeds from the sales of these commodities in Indonesian markets
will be used to finance costs actually incurred for agreed development
projects.
The financing of the commodities provided under this agreement
will be subject to :
(a) the issuance by the Government of the United States of a
Transfer Authorization or Authorizations and its (their) acceptance

by the Government of the Republic of Indonesia;
(b) the availability of the commodities at the time of exportation.

2.
Application for Transfer Authorizations will be made within 90
days after the effective date of this agreement, and, with respect to
any additional commodities or amounts of commodities provided for
in any supplementary agreement, within 90 days after the effective
date of such supplementary agreement. Each Transfer Authorization
shall incorporate the text of this agreement, plus a detailed specification
of the projects agreed upon for financing from the special 11 F AC
Agricultural Commodity" account.
A. Amount- and-Value :

The U.S. Government will provide up to

150, 000 metric tons of wheat flour, in an amount not to exceed
$16, 050, 000 at CCC cost.
B. Specifications : Specifications will be PL480 Title JI "bread
flour 11 bagged 50 pounds net. Markings will be limited to brand name,

TA number, and the word "Indonesia 11 •
C. Shipping Advice : The delivery schedule will be at the rate
of approximately 30, 000 metric tons per month. The U.S. Department
of Agriculture will procure and inspect the commodity. The
Government of Indonesia will arrange to pay ocean transportation
and related costs incurred after delivery of the commodity F . A. S.
in U. S. ports, except that the U. S. Government agrees to pay the

3.
excess cost, if any, of shipping 50 per cent of the cargo by U. S.
flag. The U. S. Government will approve all bookings and will
determine the freight differential, if any,

The Government of Indonesia

will pay the freight costs initially, and will then seek reimbursement
of the freight differential from the CCC upon submission of appropriate
documents. Despatch on U. S. flag vessels, if any, is to be shared
pro -rata between the U. S. Government and the Government of
Indonesia in those cases where the U. S. Government finances the

differential. The Government of Indonesia is r esponsible for any
applicable gener al aver age and ocean freight claims. However, the
Government of Indonesia agrees to furnish copies of all out-turn
reports to USAID within 30 days for forwarding to the CCC, and to
account for all cargo loss or damage during the ocean voyage.
D. Utilization of Commodity: The wheat flour supplied under
this agreement is provided as a contribution to assist the Government
of Indonesia in meeting its food needs. The commodity is to be sold
in the local mar ket at prices to be agreed upon in writing between
the Government of Indonesia and USAID pr ior to the arrival of the
initial shipment.

4.
E. Utilization of Sales Proceeds
1. Deposits : The net funds accruing from sales of the
commodity in the local market, shall be deposited in a
special "FAC Agricultural Commodity" account. The net
funds accruing in that account shall be the gross proceeds
from the sales of the flour less the cost to the GOI for
ocean transport, unloading, storage, internal transport,

and marketing.
2. Withdrawals : The net funds, derived from the sale of
the commodity, will be released from the special account
only for application to special projects to be agreed upon in
advance by the Government of Indonesia and USAID. These
projects should achieve the PL480 Title II objectives of
removing the causes of hunger and malnutrition, and promoting
economic development. Each Transfer Authorization approved
under the terms of this agreement will specify the exact
projects , which will be financed from the net proceeds to be
generated by sale of the commodities supplied under that
Transfer Authorization. Therefore, agreement shall be
reached through an exchange of l etters on the projects to be

5.
financed prior to approval of each Transfer Authorization.
Reimbursement of budget advances against these approved
projects, implemented after April 1, 1969, may be authorized
by USAID upon written request from the GOI. Only costs
actually incurred under these projects shall be met from

these net sales proceeds. Therefore, any funds advanced
but not actually disbursed under these projects by the end of
the Government of Indonesia 's fiscal year in question, will not
be charged to the 11 F AC Agricultural Commodity 11 account.
3. Limitations- : The projects for whi ch these r upiah are used
may not be the same as those supported by rupiah generated by
the sale or use of PL480 Title I commodities, pursuant to the
provisions of Part II, Item VI of the Agreement for Sales of
Agricultural Commodities signed on September 15, 1967, and
all the supplements to that agreement. Furthermore, no part
of these net sales proceeds shall be used to defray customs
duties or any other direct taxes paid in the course of implementing
any agreed projects.
F. Identification of Projects -as Joint Cooperative-Efforts : Appropriate
steps will be taken to assure that activities funded by rupiah generated
through the sales of the wheat flour furnished under this agreement

6.
IN.i.ll be identified through the press and other appropriate media as
joint cooperative efforts by the Government of Indonesia and the people

of the United States of America.
G. Records , Reports, Audits, Review and Claims
1. Records : The Government of Indonesia shall maintain

records and documents in a manner which will accurately
reflect all transactions pertaining to the receipt, storage,
distribution, and inspection of commodities supplied under this
agreement, up to the point of sale of these commodities in the
market. These shall include a periodic summary report, and
records of receipts and disbursements, of any funds accruing
from the operation of the program. Such records shall be
retained for a period of three years from the close of the GOI
fiscal year to which they pertain.
2. Reports : The Government of Indonesia shall submit
reports to the USAID at such times and on such forms as
prescribed by USAID.
The following is a list of the principal types of reports that
are to be submitted :
(a) Semi- annual summary reports showing receipt, distribution,


7.
and inventory of commodities and proposed schedules of
shipments or call forwards.
(b) Reports relating to progress and problems in the
implementation and operation of the program, and inspection
reports, as may be required from time to time by AID/W,
or as may be agreed upon between the USAID and the Government
of Indonesia and approved by AID/W.
(c) At the time of each deposit of net sales proceeds in the
special 11 FAC Agricultural Commodity 11 account, a report
certifying deposit and indicating the amount of wheat flour
involved, the gross sales proceeds, and deductions therefrom
for ocean transport, unloading, storage, internal transport,
and marketing costs.
(d)

At the time of each withdrawal from the special account,

a report certifying withdrawal and indicating the approved
project for which the withdrawal is being made.

3. Internal Audit :

The Government of Indonesia shall normally

conduct, or arrange to have conducted, at least one comprehensive
internal audit annually, or a series of audit examinations which,
when combined, will represent a complete review of the receipt,

8,.

transport, storage, and sale of the commodities supplied
under the terms of this agreement, of the deposit and withdrawal
of the net proceeds from the sales of these commodities in the
special account and of the utilization of such net proceeds for
approved projects. In the event the Government of Indonesia
considers such annual comprehensive audit, or series of audits,
unnecessary under the circumstances, the Government of
Indonesia shall consult with USAID for the purpose of obtaining
USAID agreement to an audit schedule other than the normal
annual schedule. Copies of reports of these comprehensive

audit examinations shall be submitted to USAID as soon as
completed.
4. USAID Review and Audit :

The Government of Indonesia

shall cooperate with and give reasonable assistance to USAID
and other U. S. Government representatives, to enable them
at any reasonable time to obtain all necessary information
pertaining to the receipt, distribution, and sale of commodities
supplied under this agreement; to observe these commodities
in storage, or the facilities used in the handling or storage
of these commodities, prior to their sale i n the market;

9.
to audit records, including financial records and reports,
pertaining to storage, transportation, distribution, and sales
of these commodities, and to the deposit of net funds accruing
from sales of these commodities in the special account, and
the withdrawal of these funds for financing approved projects;

and to review the procedures and methods used in carrying
out the requirements outlined above.
The Government of Indonesia shall also assist such U. S.
Government representatives to enable them at any reasonable
time to visit the approved projects financed by these funds.
5. Progress Review : A progress review will be arranged
in an annual meeting between representatives of the Government
of Indonesia a nd USAID. If pr ogress under any specific project
approved under this agreement is judged inade quate during this
review, it shall be removed from the list of projects approved
for financing from the special 11 FAC Agricultural Commodity"
account. The first such progress review shall be held one
year from the effective date of this agreement.
6. Claims : In the event of losses or damages to the commodities,
the Gover nment of Indonesi a will fil e claims against the

10.

appropriate entity. Copies of such claims will be given to
USAID for its r eview and files. If such claims are not

successful, or if the Government of Indonesia has been
negligent, USAID reserves the right to claim against the
Government of Indonesia. The Government of Indonesia
will consult USAID regarding disposition of commodities
judged unfit for human consumption prior to their disposition.
H. General P rovisions
1. Exchange Rate : The applicabl e exchange rate for conversion
of dollars to rupiah or r upiah to dollars will be the BE rate
in effect on the date any such conversion is made. In the
event the present exchange rate structure i s modified, the
applicable exchange rate will be an agreed rate acceptable to
both parties to this agreement.
2. Termination : This agreement may be terminated by
eit her Government by notice of termination to the other
Government. Such termination will not reduce the obligation
the Government of Indonesia has incurred under this agreement
as of the date of termination.
3. Entry into Force : This agreement shall enter into force
upon signature.

11.

IN WITNESS WHEREOF, the respective representatives, duly
authorized for the purpose, have signed the present agreement.
DONE at Djakarta, in duplicate, this twenty-sixth day of June, 1969.

/
FOR THE GOVERNMENT
OF THE REPUBLIC OF INDONESIA:

Signed

FOR THE GOVERNMENT
OF THE UNITED STATES
OF AMERICA:

Signed