ADB lends $300m to develop Indonesian capital markets
Wednesday, 12 December 2007
MANILA, Dec 11 (AFP): Indonesia will borrow 300 million dollars from the Asian Development Bank to develop the country's capital markets, the Philippines-based lender said today.
The programme would promote transparency and information disclosure in capital markets, enabling market valuation of fixed-income instruments, an ADB statement said.
Jakarta has undertaken financial sector reforms to restore its banking sector to solvency and profitability after the mid-1997 Asian crisis, the bank said.
However, the rate of economic growth has not returned to pre-crisis levels. Indonesia needs investments, especially in infrastructure.
But the shallow, bank-dominated domestic financial sector does not have the capacity at this point to provide adequate levels of appropriate funding, it added.
The banks are not yet capable of providing long-term financing of the type needed for infrastructure investments, while helping the non-bank financial sector, which is still small, appears to be the way forward, ADB said.
"The reforms will strengthen investor protection and will increase the non-bank financial sector's share of total financial assets," said Valliyoor Subramanian, a capital markets specialist for the ADB.
"Together with the broader economic reforms being undertaking in Indonesia, the development of the capital markets will contribute to productivity growth, employment generation and financial sector stability," said the bank's country director James Nugent.
The programme would promote transparency and information disclosure in capital markets, enabling market valuation of fixed-income instruments, an ADB statement said.
Jakarta has undertaken financial sector reforms to restore its banking sector to solvency and profitability after the mid-1997 Asian crisis, the bank said.
However, the rate of economic growth has not returned to pre-crisis levels. Indonesia needs investments, especially in infrastructure.
But the shallow, bank-dominated domestic financial sector does not have the capacity at this point to provide adequate levels of appropriate funding, it added.
The banks are not yet capable of providing long-term financing of the type needed for infrastructure investments, while helping the non-bank financial sector, which is still small, appears to be the way forward, ADB said.
"The reforms will strengthen investor protection and will increase the non-bank financial sector's share of total financial assets," said Valliyoor Subramanian, a capital markets specialist for the ADB.
"Together with the broader economic reforms being undertaking in Indonesia, the development of the capital markets will contribute to productivity growth, employment generation and financial sector stability," said the bank's country director James Nugent.