Page 1 August 14, 1998 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Loan No. 4378 IND (Early Child Development Project) Representations and Assurances Relating to National Competitive Bidding Procedures Dear Sirs: In connection with the Loan Agreement of this date between the Republic of Indonesia and the International Bank for Reconstruction and Development (the Bank) for the above-captioned Project, I am writing on behalf of the Republic of Indonesia to set forth the following: 1. We represent that the procedures to be followed for national competitive bidding under Part C.1 of Schedule 4 to the Loan Agreement shall be those set forth in Presidential Decree No. 16/1994 as amended by Presidential Decree No. 24/1994 (hereinafter “KEPPRES 16/94�) of the Republic of Indonesia with the following clarifications required for compliance with the provisions of the “Guidelines for Procurement under IBRD Loans and IDA Credits� (the Guidelines) published by the Bank in January 1995 and revised in January and August 1996 and September 1997: (a) in connection with any contract to be financed in part by the Bank Loan, eligible bidders will not be denied prequalification for reasons unrelated to their capability and resources to successfully perform the contract, and no bidder will be entitled to contract award unless the bidder has the capability and the resources to successfully perform the contract; and (b) given the importance of ensuring transparency in the procurement process, as provided under paragraph 1.2 of the Guidelines, bids will be opened in public and both envelopes will be opened at the same time. 2. Unless otherwise agreed to in writing between the Republic of Indonesia and the Bank, these representations and assurances form an integral part of said Loan Agreement. It is our understanding that, in making the Loan, the Bank may rely on the statements set forth in this letter. Very truly yours, /s/ Dorodjatun Kuntjoro-Jakti Authorized Representative