Indonesia: Enhancing Financial Sector Governance, Risk Management, and Depth

Sovereign Project | 44252-012 Status: Closed

Summary

Latest Project Documents


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Project Name Enhancing Financial Sector Governance, Risk Management, and Depth
Project Number 44252-012
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8326-INO: Enhancing Financial Sector Governance, Risk Management and Depth
Japan Fund for Poverty Reduction US$ 1.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Finance - Money and capital markets

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

Project Outcome

Description of Outcome
Progress Toward Outcome

The outcome has two stated performance targets;

1) OJK initiates operations and completes absorption of bank supervision

2) The Capital Market and Nonbank master Plan is at least 50% complete, including key objectives as follows; procedures for public offerings streamlined, GMRA launched, IPF established, corporate governance standards strengthened, convergence with IAS and launch of straight-through processing.

Progress is satisfactory. OJK has been launched and has absorbed banking supervision from Bank Indonesia. Efforts to launch the Global Master Repurchase Agreement have resumed and are expected to be completed by year-end 2014. Straight-through-processing has been acheived and initiatives to streamline procedures for public offerings and to imporve corporate governance are progressing under the Asian Capital Markets Forum. An Investor Protection Fund has been established.

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

Awaiting OCO approval of extension of services of the Capital Market Expert to provide continued support to OJK til end 2015.

Initially, TA implementation was delayed due to transition issues associate with the migration of financial sector supervisory responsibilities to OJK, the newly created unified regulator, from Bapepam-LK, the previous nonbank financial sector regulator. In the interim, the TA's Executing Agency, the Ministry of Finance's Fiscal Policy Office, requested and received support for a variety of workshops and focus group discussions which were undertaken to strengthen financial sector stability and to provide for sustainable economic growth. In effect, the TA provided the Fiscal Policy Office with technical advice, capacity development, and enhancements to staff as the agency developed national economic policy.

OJK became operational in 2012 and absorbed banking supervision on 1 January 2014. Since that time, OJK has begun to prioritize improvements in the agency's internal infrastructure and operating capability. Utilizing a minor change in implementation, ADB has supported a number of IT projects. One project provided a team of individual experts to transition financial sector reporting to XBRL format. A second project, which is undergoing consultant recruitment, will provide an IT firm to develop e-licensing and e-reporting across the financial sector.

In addition, the TA has provided support to the government's continuing efforts to introduce the Global Master Repurchase Agreement (GMRA) as the standard repo documentation for Indonesia. This engagement provided an international and national law firm to provide legal advice, drafting and translation services, and market education. Finally, the TA has supported the government's efforts to encourage municipal finance to support infrastructure projects. Specifically, a local investment bank was retained and provided a shadow issuance including the completion of a prospectus. The output of this engagement provided substantial levels of knowledge transfer and established a base through which a live issuance could proceed.

In a continuation of prior engagements, ADB supported the placement of a long-term resident advisor to the Office of the Chairman who provided assistance with project management and capacity development. Currently, the advisor is focusing on the creation of a coordinated financial sector development plan. A second long-term resident advisor remains in place at 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 The impact, outcome, and outputs of the TA reflect the findings of consultations with the government during the processing of the FMDIP, as well as the recommendations of an ADB TA project designed to identify constraints to increasing liquidity in the government bond market. All other facets of the TA have been discussed with and reflect the priorities of the executing agency and the implementing agencies.
During Project Implementation Became effective on 27 June 2013.

Business Opportunities

Consulting Services Expressions of interest solicited from qualified consulting firms and individual consultants will establish the appropriate packaging of the consulting services (one or several packages, or a combination of firms and individuals, depending on market testing). ADB will hire consulting firms through quality and cost-based selection (80:20), according to its Guidelines on the Use of Consultants (2010, as amended from time to time). Individual consultants will be recruited using Individual Consultant Selection (ICS) method. In lieu of direct support, the TA will organize and coordinate the research projects as necessary and will provide a platform for evaluation and publication of the research papers.
Procurement NA

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
Fiscal Policy Office-Ministry of Finance
Fiscal Policy Office-Ministry of Finance
Gedung RM Notohamiprojo, 8th floor
Jl. DR. Wahidin No. 1
Jakarta, Indonesia

Timetable

Concept Clearance 07 Sep 2012
Fact Finding 09 Apr 2012 to 18 Apr 2012
MRM -
Approval -
Last Review Mission -
Last PDS Update 25 Sep 2015

TA 8326-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
24 Jan 2013 27 Jun 2013 27 Jun 2013 31 Jan 2015 31 Jan 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,000,000.00 0.00 0.00 0.00 0.00 1,000,000.00 24 Jan 2013 868,034.67
Title Document Type Document Date
Enhancing Financial Sector Governance, Risk Management, and Depth Technical Assistance Reports Jan 2013

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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