Indonesia on Board with U.S. Locomotives Bid and MCC

UNCLAS JAKARTA 001236 SIPDIS SENSITIVE DEPT FOR EAP/MTS AND EEB/IFD/ODF-DWILLIAMS DEPT PASS EX-IM - JABRAMSON, ECIAMPA DEPT PASS COMMERCE - A/S CPADILLA DEPT PASS USAID - PDELP E.O. 12958: N/A TAGS: BEXP ELTN EFIN ECON EAID PGOV ID REF: JAKARTA 00775 SUBJECT: Indonesia on Board with U.S. Locomotives Bid and MCC ¶1. (SBU) Summary: In a meeting with Ambassador Hume on June 19, 2008, Minister of National Development Planning Agency (Bappenas) Paskah Suzetta agreed to accept bids from U.S. companies on a $55 million locomotives contract for which General Electric (GE) intends to bid. Minister Suzetta promised to provide timely data and performance reports for Milennium Challenge Corporation (MCC) review. End Summary. RUMOR - CHINA THE EXCLUSIVE BIDDER -------------- ¶2. (SBU) Bappenas is preparing to publish a "Green Book" that authorizes tenders of selected public projects with tied aid financing. Early in 2008, GE heard rumors that the Green Book would restrict the locomotives project to Chinese tied aid financing, effectively disqualifying GE from competing for the tender. GE also believes the South Koreans intend to compete for this project. GE has not produced evidence of competitor offers. BAPPENAS MINISTER ACCEPTS U.S. BIDDERS -------------- ¶3. (SBU) Ambassador Hume discussed with Minister Suzetta the U.S., World Bank and international community's expectation that Indonesia hold open procurements generally and that this process would result in the best products and services. Ambassador Hume urged Minister Suzetta not to restrict the locomotives contract to a specific country and eliminate opportunities for U.S. companies to bid. Miniser Suzetta verbally agreed to accept U.S. bidders with export credit financing. Six Bappenas deputies responsible for planning, transport, energy, finance, foreign assistance and MCC attended the June 19 meeting. OTHER ADVOCACY EFFORTS -------------- ¶4. (SBU) Prior to Ambassador Hume's meeting with Minister Suzetta, we delivered a letter from U.S. Under Secretary of Commerce Christopher Padilla to Suzetta requesting GE be allowed to compete for the locomotives contract. Ambassador Hume raised the issue with Minister of Transportation Jusman Syafii Djamal (see reftel). We also provided white papers and discussed the issue with the deputy coordinating minister for international economic cooperation, a national legislature member on the finance committee, the World Bank country director and procurement specialist and officers of the Government of Indonesia's (GOI) recently established Office of Government Procurement Policy. All expressed support for an open international tender for the locomotives contract. Post will continue to monitor the issue in close cooperation with GE. GOI LOOKS TOWARDS MCC REVIEW -------------- ¶5. (SBU) Ambassador Hume told Minister Suzetta that MCC Chief Executive Officer Ambassador John J. Danilovich said he expected continued White House support for MCC under a new administration. Ambassador Hume underlined child health, immunization and anti-corruption measures and the need for current data as key issues with regards to MCC eligibility. Minister Suzetta said the GOI is working with the World Health Organization and others to collect current data. He said the GOI is committed to improving performance in order to meet and exceed MCC performance indicators. Bappenas issued a press release following the June 19 meeting regarding the GOI's intention to meet the MCC performance indicators in order to qualify for future Compact Status. HUME