ADB lends US$300mn to develop Indonesian capital markets

MANILA, Dec 11, 2007 (AFP) – Indonesia will borrow 300 million dollars from the Asian Development Bank to develop the country’s capital markets, the Philippines-based lender said Tuesday.

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 Su