Indonesia: Strengthening Indonesia's Capital Market

Sovereign Project | 32507-032 Status: Closed


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Project Name Strengthening Indonesia's Capital Market
Project Number 32507-032
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7466-INO: Strengthening Indonesia's Capital Market
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Finance - Money and capital markets

Gender Equity and Mainstreaming
Project Rationale and Linkage to Country/Regional Strategy

Project Outcome

Description of Outcome
Progress Toward Outcome

The performance targets for the outcome statement include the following; increase in market capitalization by 50% over the medium-term, by 2012, and doubling of the number of individual holders of market securities, equities, and government bonds, including through mutual

funds from 2007 2012.

Progress is considered satisfactory. Stock market capitalization has effectively doubled to 45% of GDP in 2012 from 20% in 2008 although stock market capitalization has only now returned levels posted before the global financial crisis. However, the size of the local currency bond market has remained stagnant at around 15% of GDP with new issuance outpaced by GDP growth. The number of individual investors has continued to grow but remains small at around 400,000. Tracking progress toward this goal is complicated by the tendency of Indonesian citizens to invest in their own market through Singapore to minimize taxation.

Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)

The TA was completed on 31 December 2014. SEPF is now working on the closure of all contracts and TA account. The TA remained active for an unusually long period of time. This situation arose out of delays associated with the transition, and migration of supervisory responsibilities to the newly created unified regulator, OJK, from the nonbank financial regulatory Bapepam-LK. This transition was accompanied by a large volume of purely administrative tasks for which TA did not represent an acceptable mode of support.

The TA is in an advanced state of implementation. As originally envisioned, the TA supported a wide range of training activities. In-house compliance training was provided to broker-dealers in conjunction with the government's requirement for the industry to develop and adhere to internal compliance guidelines. This effort was further back-stopped with an external workshop on compliance management in capital markets. The TA also provided significant and extented support to the government's efforts to introduce the international standard Global Master Repurchase Agreement to Indonesia. International and national law firms provided technical advice, drafting and translation. However, this project has been delayed due to conflicts with national regulations which, for example, appear to require such documentation be presented in Bahasa, and by the insistance of the regulator to restrict counter-parties from choosing their governing law. Finally, the TA supported attendance at a number of APEC workshops which focused on internal audit, derivatives, and structured products, among others.

More recently, the TA provided support to the Ministry of Finance''s Fiscal Policy Office as the successor executing agency for the TA. Funding was provided to support a continuing subscription to Oxford Economics, which bolstered the agency's macroeconomic forecasting. In addition, the TA provided support to a number of international conferences, hosted by Indonesia, that covered a range of economic issues such as avoiding the middle income trap.

Throughout the life of the TA, ADB has supported the placement of a long-term resident advisor to the Office of the Chairman (Bapepam-LK and its successor, OJK) who provided assistance with project management and capacity development. While the advisor focused broadly on achieving the goals of the Capital Market Master Plan, specific achievements include the investor area, straight-through processing, and the launch of the investor protection fund. Recently, a second long-term resident advisor was placed in OJK to act as a project manager in support of the IT master plan. Various additional TA projects have been organized around these two resident advisors.

Geographical Location

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation

Business Opportunities

Consulting Services

A combination of consulting firms and individual consultants will be engaged in accordance with the Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers (2007, as amended from time to time), based on the requirements to be identified during the course of implementation of the Program and the follow-up policy measures under the post-program monitoring framework. Quality-based selection procedure will be followed for selecting the consulting firm. Short-listed firms will submit simplified technical proposals.

1. Assistance in regulatory issues arising from IOSCO self-assessment and FSAP+++ assessments

- International Expert in IOSCO Standards (1.5 person-months)

2. Support the implementation of the Capital Market Master Plan (2010-2014)

- International Experts ( to be decided based on CMMP developed by end 2009 - a maximum of 10 person-months for internatiional and 5 person-months for national experts is envisaged). A consulting firm is likely to be engaged.

3. Improving market surveillance and investor protection: Stock-taking of regulatory framework

- International Financial Sector Regulatory Expert (2 person-months)

- National Financial Sector Expert (2 person-months)

4. Support to strengthen Bapepam-LK's investigative and enforcement capacity by providing the necessary training proram and secondment with the relevant enforcement/regulatory authorities.

- International Capital Market Regulatory and Enforcement Expert (2 person-months)

5. To develop an Implementation Plan to regulate Investor Protection Funds for the Securities Market/Credit Guarantee

- International Securities Market Regulatory Expert (2 person-months)

- National Securities Market Legal Expert (2 person-months)

6. Development of a structured and comprehensive Human Resource Capacity Program for Bapepam-LK

- International Senior HR Specialist (6 person-months)

- National HR Expert (6 person-months)

7. To develop a comprehensive database and user-friendly website to provide consolidated capital markets and NBFs information akin to "One-Stop Information Centre" for capital markets

- International Database/IT expert (3 person-onths

- National Website Designer (3 person-months)

8. Establishment of Capital Markets Institute for capital markets

- International Institutional Development Expert (4 person-months)

9. Comprehensive compliance framework for capital markets to enhance investor protection and support capacity building

- International Capital Market Regulatory and Compliance Expert (2 person-months)

10. New Products: Mortgage Credit Insurance and Other Risk Management Products

- International Mortgage Credit Insurance Expert (2 person-months)

11. Support for Insurance Industry Consolidation

- International Insurance Industry Expert (2 person-months)

- National Insurance Industry Expert (2 person-months)

Responsible Staff

Responsible ADB Officer Stephen Schuster
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
Cap. Mkt. & Financial Inst. Supervisory Agency
Mr.Gonthor Aziz
Gedung Soemitro Djojohadikusumo
Departemen Keuangan RI
Jl. Lap Banleng Timur 1-4, Jakarta 10170
Ministry of Finance
Jl. Lapangan Banteng Timur 2-4
Jakarta 10710


Concept Clearance 16 Oct 2009
Fact Finding 10 Mar 2009 to 20 Mar 2009
Approval -
Last Review Mission -
PDS Creation Date 28 Jul 2009
Last PDS Update 31 Mar 2015

TA 7466-INO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
04 Dec 2009 18 Jan 2010 18 Jan 2010 31 Dec 2011 31 Dec 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 400,000.00 0.00 0.00 0.00 1,900,000.00 04 Dec 2009 1,257,409.80
Title Document Type Document Date
Strengthening Indonesia's Capital Market Technical Assistance Reports Dec 2009

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

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