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Jakarta, 28 March 2007
Japan to Provide Yen Loan Assistance to Indonesia for Nine Projects

1. The Government of Japan has decided to provide Yen Loan assistance to the Government of the Republic of Indonesia, totaling up to ￥99.811 billion* (approx. US$847.2 million or Rp7.718 trillion) for nine projects in order to support its efforts for economic and social development.

   
   

   Notes to this effect were exchanged on March 28 in Jakarta between Mr. Satoru Satoh, Charge d’Affaires ad interim of Japan to the Republic of Indonesia, and Mr.M.Ibnu Said, Expert Staff to the Minister of Foreign Affairs for Management, Department of Foreign Affairs of the Republic of Indonesia.

   
   

   * Together with ¥ 23.554 billion (approx.US$200 million, RP1.821 trillion) of 2 programs (“Third Development Policy Loan” and “Infrastructure Reform Sector Development Program”) (notes were already exchanged on March 23, 2007) and \1.869 billion (approx.US$15.9 million, RP144.5 billion) of MRT (notes were exchanged on November 28, 2006), Japanese Government’s yen loan agreed to extend to Indonesia in Japanese fiscal year 2006 totals ¥ 125.234 billion (approx.US$1.063 billion, RP 9.684 trillion).

   
   

   The project titles and maximum amounts are as follows;
   

   (1)	“PLN Operation Improvement System Project for Supporting Generation Facilities” (¥ 4,498 million, approx. US$38.2 million or Rp347.8 billion)
   (2)	“North-West Sumatra Inter-connector Transmission Line Construction Project” (¥ 16,119 million, approx. US$136.8 million or Rp1.246 trillion)
   (3)	“Railway Double Tracking on Java South Line Project (III) (Engineering Services)” (¥ 981 million, approx. US$8.3 million or Rp75.9 billion)
   (4)	“Hasanuddin University Engineering Faculty Development Project” (¥ 7,801 million, approx. US$66.2 million or Rp603.2 billion)
   (5)	“National Geo-Spatial Data Infrastructure Development Project” (¥ 6,373 million, approx. US$54.1 million or Rp492.8 billion)
   (6)	“Regional Infrastructure for Social and Economic Development Project” (¥ 23,519 million, approx. US$199.6 million or Rp1.819 trillion)
   (7)	“Peusangan Hydroelectric Power Plant Construction Project” (¥ 26,016 million, approx. US$220.8 million or Rp2.012 trillion)
   (8)	“Aceh Reconstruction Project” (¥ 11,593 million, approx. US$98.4 million or Rp896.4 billion)
   (9)	“ICT Utilization Project for Educational Quality Enhancement in Yogyakarta Province” (¥ 2,911 million, approx. US$24.7 million or Rp225.1 billion)




2. The outlines of the nine projects are as follows;
   

   (1)	PLN Operation Improvement System Project for Supporting Generation Facilities This project is to introduce an Operation Improvement System such as Enterprise Asset Management System into PLN, which contributes to efficient operation of power plants, in order to improve the tight supply-demand situation and stability of power supply.
   (2)	North-West Sumatra Inter-connector Transmission Line Construction Project This project is to construct an interconnecting transmission line (275kV×2) between North Sumatera grid and West Sumatra grid and increase the capacity of substations to 275 kV (present capacity: 150 kV) in order to improve the tight supply-demand situation and stability of power supply in Sumatra.
   (3)	Railway Double Tracking on Java South Line Project (III) (Engineering Services) This project is to prepare a detail design for railway double tracking on Java South Line (Kroya - Kutoarjo), in order to improve railway safety and transportation capacity in Java Railway Network.
   (4)	Hasanuddin University Engineering Faculty Development Project This project is to improve higher education and to strengthen research activities in the field of engineering by developing the Engineering Faculty of Hasanuddin University in South Sulawesi Province, including expanding facilities and equipment, and providing fellowship and research programs for the lecturers in Japan.
   (5)	National Geo-Spatial Data Infrastructure Development Project This project is to acquire and produce the geo-spatial data of Sumatra Island and to develop the National Geo-Spatial Data Infrastructure (NSDI) networking system for data sharing, as well as to support Regional Development Planning by utilizing the NSDI networking system.
   (6)	Regional Infrastructure for Social and Economic Development Project This project is to build the infrastructures including roads, water supply, irrigation, market, health service facilities, schools and to provide microfinance services for the areas of poverty based on the regional needs.
   (7)	Peusangan Hydroelectric Power Plant Construction Project This project is to construct the run of river type hydroelectric power plant (maximum capacity: 86.4MW) and interconnecting transmission line in Nangroe Aceh Darussalam Province in order to improve the tight supply-demand situation and stability of power supply in North Sumatera grid.
   (8)	Aceh Reconstruction Project This project is to build the infrastructures including roads and drainage for the reconstruction and the peace-building support for Nangroe Aceh Darussalam Province, the area affected by the Large-Scale Earthquake off the Coast of Sumatra and the Indian Ocean Tsunami Disaster
   (9)	ICT Utilization Project for Educational Quality Enhancement in Yogyakarta Province This project is to prepare ICT and network facilities to enhance educational quality in elementary and junior high schools in Yogyakarta Province.

   
   

3. Loan conditions are as follows;
   For project (1), (2), (3), (4), (6) and (9)
   

   i)	Annual interest rate: 1.5% (general condition)
   ii)	Repayment period: 30 years (including a grace period of 10 years)
   iii)	Procurement condition: general untied loan (For human resource development portion of (4), preferred condition is applied. Annual interest rate: 0.75%, Repayment period: 40 years including a grace period of 10 years)

   
   For projects (5)
   

   i)	Annual interest rate: 0.4% (under condition of using Japan’s technology)
   ii)	Repayment period: 40 years (including a grace period of 10 years)
   iii)	Procurement condition: tied loan

   
   For projects (7) and (8)
   

   i)	Annual interest rate: 0.75% (preferred condition is applied because both projects are categorized as a field of peace-building and (7) is categorized as alternative energy source field as well.)
   ii)	Repayment period: 40 years (including a grace period of 10 years)
   iii)	Procurement condition: general untied loan

   
   

4. Through these nine projects above and already agreed two programs, it is expected that the improvement of the investment climate and the enhancement of human resource development in Indonesia as well as the stabilization of macro economy and the governance reform by the Government of Indonesia will be achieved.




5. With this exchange of notes, the aggregate of agreed Japan’s Yen Loan to the Republic of Indonesia amounts ¥ 4.166 trillion (approx.US$ 35.36 billion or Rp322.127 trillion).

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