74090
       Republic of Indonesia: Financial Sector and Investment Climate Reform and
                     Modernization (FIRM) Development Policy Loan


                               SUMMARY OF DISCUSSION∗

                              Meeting of the Executive Directors

                                          November 20, 2012


      Executive Directors approved the Financial Sector and Investment Climate Reform and
Modernization (FIRM) Development Policy Loan (DPL) to the Republic of Indonesia in the
amount of US$100 million on the payment terms and conditions set out in the President’s
Memorandum (R2012-0216).

       Executive Directors expressed support for the objectives of the loan, which aims to
promote the development of a sound, efficient and inclusive financial sector and support
improvements in the investment climate in Indonesia to help achieve its medium-term economic
development and poverty reduction goals. Directors noted the country’s positive growth trend
and improved debt situation since the Asian financial crisis.

        Executive Directors welcomed ongoing financial sector reform and urged further efforts
to build institutional capacity and facilitate policy coordination between government agencies. In
particular, Directors called for appropriate technical assistance during the transition to the new
Financial Supervision Authority (OJK) to maintain progress in the wider sector reform agenda.
Directors called for continued improvements in the business climate and labor market reform.
Directors welcomed changes to the small and medium enterprise credit program (KUR) to make
financing available to more clients, and urged careful learning from these efforts for application
to other countries. Lastly, Directors commended the Bank for its close collaboration with other
development partners in the preparation of this operation.




∗
This summary is not an approved record.