Z,t- A'5 2S~G /A//- 4 Documeat of The World Bank FOR OmCIAL USE ONLY MICROFICHE COPY Report No. :P- 5764 IND Type: (PM) Title: FINANCIAL SECTOR DEVELOPMENT PN Author: MALIK, S Rewt o P-5764-IND Ext. :82506 Room:A10071 Dept. :EA3TE MEMORANDUM AND RECOMMDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO TME EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$307.0 MILLION TO THE REPUBLIC OF INDONESIA FOR TEE FINANCIAL SECTOR DEVELOPMENT PROJECT OCTOBER 19, 1992 This document has a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENT Currency unit - Indonesian Rupiah (as of March 1, 1992) $1.00 - Rp 2,000 Rp 1.0 billion - $0.500 million PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADB - Asian Development Bank BBD - Bank Bumi Daya BDN - Bank Dagang Negara BI - Bank Indonesia BIS - Bank for International Settlements BNI - Bank Negara Indonesia BRI - Bank Rakyat Indonesia BankExim - Bank Ekspor Impor Indonesia GDP - Gross Domestic Product GOI - Government of Indonesia MOF - Ministry of Finance PPF - Project Preparation Facility SCBs - State Commercial Banks USAID - United States Agency for International Development FISCAL YEAR Government of Indonesia: April 1 - March 31 Bank Indonesia: April I - March 31 State Commercial Banks: January 1 - December 31 FOR OMCAL USE ONLY INDONESIA FINANCIAL SECTOR DEVELOPMENT PROJECT Loan and Proiect Summary Borrower: Republic of Indonesia Beneficiaries: The five State Commercial Banks (SCBs)--Bank Bumi Daya (BBD), Bank Dagang Negara (BDN), Bank Ekepor Impor Indonesia (BankExim), Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI); and Bank Indonesia (BI) Amount: $307 million equivalent Terms: Twenty yeare, including five years of grace, at the Bank's standard variable interest rate. OnlendinR Terms: The Borrower will onlend the proceeds of the loan to the five SCBs as interest free loans repayable over 15 years, including 5 years of grace, to be subsequently converted into equity ($300 million), and to EI ($7 million) as a grant. The SCBs would onlend these funds to their subborrowers in the private sector at prevailing market rates, currently around 22 percent. Financina Plan: Local Foreian Total …$--- million) ---------- IBRD - 307.0Lj 307.0 Government of Indonesia (GOI) 755.5 - 755.5 Conversion of subordinated debt into equity 879.5 603.0 1,482.5 Retained earnings 449.5 - 449.5 Reserves for loan losses 117.5 - 117.5 Subordinated debt 464.0 - 464.0 Total 2,666.0 910.0 3,576.0 /a Includes refinancing of the Project Preparation Facility (PPF No. P-162) in the amount of $1.0 million. Economic Rate of Return: Not Applicable Staff Appraisal Renort: No. 10482-IND, dated October 19, 1992 &P.: IBRD 23357 This document has a restricted distribution and may be used by recipients only in tl. perfc.mance of their official duties. Its contents may not otherwise be disclosed without World Ba: k authorization. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF INDONESIA FOR THE FINANCIAL SECTOR DEVELOPMENT PROJECT 1. The following memorandum and recommendation on a proposed loan to the Republic of Indonesia for $307 million is submitted for approval. The proposed Bank loan would be for 20 years, including five years of grace, at the Bank's standard variable interest rate and would help finance a Financial Sector Development Project. The proceeds of the loan would be passed on by the Borrower to the five State Commercial Banks (SCBs) as interest free loans repayable over 15 years, including 5 years of grace, to be subsequently converted into equity ($300 million) with the prior approval of the Bank, and to Bank Indonesia (BI) as a grant ($7 million). 2. Background. Indonesia's financial sector has undergone a dramatic transformation to a competitive, market-based system since the introduction of a series of reforms beginning in 1983. As a result of these deregulation measures, the financial sector has been opened to broad-based private sector participation. There are now over 180 private banks (including joint ventures with foreign banks) in Indonesia, accounting for 45 percent of total deposit money bank assets. This trend is likely to continue in the future since, as a result of the new Banking Law, the SCBs are now subject to the same rules and regulations as the private banks. 3. Most of the policies needed to develop a more robust and balanced financial structure are now in places interest rates have been deregulated; credit ceilings abolished; entry barriers lowered; subsidized directed credits drastically reduced; and steps taken to develop the money and capital markets. Both the banking sector and the capital market have responded favorably to these reforms, which have been made, in conjunction with real sector reforms, within the context of an open capital account and a government policy of refraining from the financing of budget deficits through domestic borrowing. As a result, these reforms have contributed to a strong increase in private sector investments, non-oil export growth, improvements in the efficiency of capital use and accelerated economic growth. 4. In this new environment, the Government's primary concern is to promote a sound financial system, encourage competition, at the same time taking appropriate steps to ensure stability. The new Banking Law, approved by Parliament in March 1992, provides for 49 percent privatization of the SCBs through the issuing of shares on the stock market. 5. Rev Sectoral Constraints. While the deregulation initiatives have yielded substantial positive results, they have also led to a concentration of credit among a few large business groups, and engendered new challenges. In the past, the Government of Indonesia (001) exercised substantial direct control over productive activities. As a consequence, the adequacy of prudential regulations and bank supervision, commercial laws and their enforcement, and the financial performance and condition of state-owned financial institutions were not considered critical to the stability and growth of the financial system. Rapid growth since deregulation has exposed several weaknesses in the financial system: -2- (a) with the development of Indonesia'. market-oriented financial system, a primary objective of the Government's supervisory role has become that of ensuring the safety and soundness of banks, in order to make them efficient savings mobilizers and allocators of resources. At the same time, thl mushrooming of new financial products and institutions in recent years has strained the capacity of authorities to effectively supervise financial institutions and regulate the markets properly; (b) with each successive reform in the 1980s, Indonesia's laws governing the financial sector became Increasingly antiquated and inadequate. A system of laws and regulations is needed to promote the use of contracts that are clear about the rights and obligations of contracting parties. Similarly, In Indonesia, it is difficult to obtain reliable information for lack of clearly defined accounting and auditing requirements, which are a critical prerequisite for the assessment and transparency of financial risk, improved credit allocation and efficient intermediation. This not only has increased the cost of doing business in Indonesia, but also has resulted in the concentration of credit in a small number of business groups; (c) in spite of the 1983-1991 deregulation, the SCBs, which account for about 45 percent of the assets of Indonesia's deposit money banks, continued to operate outside the purview of the Banking Law. They received in the past, differential treatment with respect to banking regulations and have had disproportionate access to cheap and captive sources of funds. Not only the SCBs benefitted from their privileged position, but certain individual and group borrowers also benefitted from their easy access to credit from the SCMe; and (d) despite recent growth, the financial system remains underdeveloped and important gaps remain at the long end of the market, particularly In the availability of equity and equity-type instruments. Partly due to the domestic balanced budget rule, there is today a dearth of financial paper and a lack of benchmark financial pricest market determined reference rates for both short- term (interbank and money markets) and long-term (bond market) are absent. 6. While the 1983-1991 reforms have generated a favorable response from both the banking sector and the stock market, the increasing number of market participants snd new financial products have increased the risk of financial instability, in the absence of an effective legal, regulatory and supervisory apparatus. The GOI's policy of deregulation, Intended to promote rapid economic development while also helping to ensure equitable distribution of development gains, has resulted in unequal access to credit and thus de facto limited competition In the real sector; many of the benefits of deregulation have accrued to a few influential business groups. The recently passed new Banking Law will help remedy this situation. - 3 - 7. Government Strateay. The GOI's overall economic reform program is designed to rationalize the incentive framework and economic regulations. The Government's role has been gradually shifting from one of direct control of productive activities towards one of facilitating the development of markets and competition. Developing a competitive and robust financial system for efficient resource allocation is a core element of this strategy. It requires a regulstory framework that addresses market failures while retaining competitive pressures in the industry, thus lowering the risk of financial instability and reducing the economy-wide costs of capital formation. In order to address the key remaining issues, the GOI has: la) issued, in early-1991, a new set of prudential banking regulations, including the Bank for International Settlements (BIS) guidelines for minimum capital requirements; (b) promulgated new legislation in March-April 1992 for banking, pension funds and insurance companies; (c) changed, in September 1992, the legal charter (into a limited liability company) and senior management of each SCB; (d) prepared Plans of Action for the five SCBs for improving their efficiency, including timetables for reducing the proportion of classified assets to total assets and bringing them into compliance with legal lending limits; (e) initiated a program to strengthen prudential regulations and the supervisory apparatus for the securities market, with USAID's assistance; (f) taken steps to further deepen the money market and to develop a transparent reference rate for variable rate lending by financial institutions, with the assistance of a large multiiational bank; (g) initiated a program to improve the country's economic and commercial laws, including provision for accounting and auditing standards, with USAID's assistance; and (h) initiated steps to develop regulatory frameworks and prudential safeguards for insurance companies and pension funds, as well as guidelines for investment funds and venture capital, and to establish a credit rating agency, with ADB's assistance. 8. Total additional capital requirements to bring the SCBs into compliance with BI's prudential regulations and with BIS guidelines (minimum 8 percent capital to risk-weighted assets ratio) by December 31, 1994, are estimated at $3.6 billion (about 3.5 percent of 1990 GDP). A very large proportion of the additional capital needs stem from two factors: (i) the GOI did not inject new equity into the SCBs during the last 25 years and appropriated 45 percent of after-tax profits as dividends; and (li) the adoption of new prudential regulations related, for the first time, to loan loss provisioning and minimum capital requirements based upon international norms. The GOI has proposed to recapitalize the SCBs through: SCB retained -4- earnings; inclusion of outstanding BI liquidity credits qualifying as subordinated term debt; SCB general loan loss provisions; the conversion into equity of subordinated debt (defined as debt incurred by the SCBs under subsidiary/onlending agreements entered into between the GOI and the respective SCBs under completed and ongoing financial intermediary lending operations financed by the World Bank and other bi- and multilateral agencies]; and fresh infusions of equity, including the proceeds of the proposed loan. 9. Lessons Learned from Past Operations. In Indonesia, the Bank Group has approved, to date, a total. of $1.6 billion in 17 operations for financing investments through a variety of financial institutions. The general focus of loans made prior to the onset of the GOI'e financial sector reform program in 1983 reflected the Bank's traditional DFC-lending approach to single financial intermediaries with emphasis on institution-building. Generally, subsidized, directed credit programs that were supported under these operations were ineffective in promoting productivity improvements and had only limited impact in achieving their policy and institutional development objectives. The Bank made two significant shifts in its lending operations in the mid-1980s. One, it moved away from subsidized lending; and two, it incorporated an increasing number of competing financial intermediaries. However, specific target groups continued to benefit from the Bank's lending activities so as to redress various market failures, and little attention was given to use of these operations for promoting financial sector development. Following the preparation of a Financial Sector Report in 1990 and the very substantial reforms of the financial system undertaken during 1983-1991, the Bank strategy now is to foster improvements in the efficiency of resource allocation in Indonesia. In the short-term, the emphasis is on ensuring the safety and soundness of the financial system and reducing uncertainty and risks in private business transactions through a further strengthening of the institutional infrastructure for formal finance. In the medium-term, the focus includes phasing out the direct role of the public sector in the financial system. 10. Rationale for Bank Involvement. The Bank supports the GOI's objectives and priorities for the farther development and efficient growth of the financial sector. Over the last several years, the Bank has been involved in an active policy dialogue with the GOI through sector and economic reports, informal policy notes and discussions on specific issues. The Bank has also supported the GOI's policy reform initiatives through several adjustment loans, including two loans for private sector development in FY89 and FY91. 11. The proposed project, developed over a period of almost two years, required extensive preparatory work in c number of related areas--new Banking Law, new prudential banking regulations, independent asset quality reviews of the SCBs, new legal charters for the SCBs and detailed Plans of Action for the SCBs. It also required great determination and foresight on the part of GOI to design appropriate measures relating to the future operations and business practices of the SCBs. The Bank, under a Project Preparation Facility (PPF No. P-162), assisted the GOI in undertaking detailed asset quality reviews of each SCB as well as defining technical assistance needs in the areas of bank supervision and credit information. The financial support to the GOI for recapitalization of the SCBs, and the associated Plans of Action and -5 - provisions for enhancement of SCB asutonomy under the project, are considered critical to Improving the efficiency of resource allocation for the whole banking sector. The conversion of subordinated loans into equity--the leost- expensive method of financing the recapitalization--would greatly assist the GOI In view of its domestic balanced budget rule. 12. Project Objectives. The project's primary objective is to asslst the 001 in changing past practices in the financial system regarding credit allocatioun such changes would foster improvements in the efficiency of resource allocation in the economy and more equitable treatment for firms and individuals alike. Specifically, the project would be instrumental in promoting a change in the ways in which the SCBs conduct business. The project would assist the GOI ins (a) strengthening prudential banking regulations; (b) enforcing implementation of prudential regulations by strengthening BI's bank supervision, and improving credit Information systems and staff skillsl and (c) promoting tho competitiveness and efficiency of the SCBs by subjecting them to the same rules as the private sector (i.e., as provided under the new Banking Law, BI's new prudential regulations, and the CB's new legal charters). This will allow greater autonomy to the managements of the SCBs. 13. The SCBe have been corporatized through a change in their lagal charters. The SOBs balance sheets would be restructured and capital bases strengthened, and they would be subjected to the play of market forces. With Government's firm commitment not to inject additional equity after the SCB! have come into compliance with prudential regulations, the SCBs would have to raise future equity needs for asset expansion through the issuance of shares in the equity market. This will occur as soon as they meet listing requirements. At present, the SCBs do not meet listing requirements, i.e., being rated "sehat (financially sound)" for two consecutive years. The project's recapitalization plan, including the agreed Plans of Action for improving the SCBs' respective asset portfolios, would prepare them for entry into the capital market. 14. Prolect Description. The project comprises three components: (a) technical assistance to BI for improving existing systems and/or designing new ones for bank supervision and credit information, and training of BI staff to implement effectively these systems; (b) a line of credit to the five SCBe for the provision of subloans to the private sector for carrying out investment projects. The Bank funds would initially be disbursed on the basis of eligible subproject expenditures and standard procedures regarding subproject processing and procurement as provided under the Bank's standard financial Intermediary operations in Indonesia; and (a) the recapitalization of the SCB!. - 6 - 15. As part of the recapitalization and in order to achieve the project's policy objectives, Bank funds on3ent by the GOI to the SCBs would be subsequently converted by the GOI into equity, in three phases, upon confirmation of compliance, satisfactory to the Bank, of the SCBs with their respective Plans of Action, BI's independent asset quality reviews and new prudential banking regulations. Due to the complexities involved in the establishment of the appropriate policy framework vithin which to implement the recapitalization of the SCBs, and to keep the momentum generated to date, retroactive financing (in an amount of up to 10 percent of the Bank loan) for subproject expenditures incurred after March 31, 1992 (the first phase of the recapitalization period being April 1, 1992 to March 31, 1993), and for consultants engaged by BI under the TA component, would be provided under the project. 16. The estimated total financing requirement for the project is $3.6 billion equivalent, with a foreign exchange cowponent of $0.9 billion. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Indonesia are given in Schedules C and D, respectively. The Staff Appraisal Report, No. 10482-IND, dated October 19, 1992, is being distributed separately. 17. Agreed Actions. During negotiations. agreements were reached with the Borrower, BI and the SCBs on the following: (i) BI would issue, by April 1, 1994, a new regulation (to be applicable to all banks in Indonesia) defining the methodology to be used for establishing loan loss provisions in the calculation of capital adequacy, to be effective no later than March 31, 1996. Therefore, while all banks in Indonesia would have to comply with international Lorms on loan loss provisioning and capital adequacy by no later than March 31, 1996, the SCBs would have to meet this requirement by December 31, 1994; (ii) there would be no increase in the risk weighted assets through December 31, 1994, of the two weakest banks (BBD and BDN) from their respective March 31, 1992 positions, and no increase in the large borrowers' portfolio of BRI from its March 31, 1992 position; (iii) the financing plan for the SCB recapitalization component, including the provision that at least 80 percent of the SCBs' FY93 and FY94 after-tax profits would be converted into equity (since the GOI has already made provisions for the SCBs' PY92 dividends in its FY93/94 budget, these dividend proceeds would be reinvested as equity infusions). Any shortfall that might materialize during project implementation would be met by the GOI through further equity infusions; (iv) a Plan of Action for each SCB; (v) BI would carry out annual asset quality reviews of each SCB to ensure that they are in compliance with the new prudential regulations on loa1n loss provisioning and minimum capital requirements, as well as with the agreed Plans of Action; (vi) the adoption of Bl's Bank Rating System as the transparent mechanism for establishing performance criteria to be used in determining annual bonuses for members of the SCBs' respective Boards of Directors; (vii) asset growth after December 31, 1994, for each SCB would be supported through corresponding increases in their respective capital bases, achieved through retained earnings and/or issuance of shares in the capital market. The 001 would not provide additional equity to the SCBs after December 1994 to support asset growth except to maintain a maximum 51 percent shareholding in each SCB; (viii) any - 7 - funds channelled through the SCBa for the GOI's directed credit programs in the future will be on a managed-fund basisl and (ix) criteria for the selection and processing of subborrowers and subprojects financed with loan proceeds. 18. Conditions of loan effectiveness includes (a) publication in the official Gazette of amendment., satisfactory to the Bank, to the SCBs' Articles of Association that provide them the authority to raise equity through the issuance of shares in the stock market; (b) conversion into equity of disbursed and outstanding amounts under completed and ongoing Bank loan. and other subordinated debt as of December 31, 1991 (or equivalent contributions of capital by the 001); (c) the signing of a Financial Agreement between the Borrower and BI, and Subsidiary Loan Agreements between the Borrower and the five SCBs; (d) amendment of existing Subsidiary Loan Agreements for those Bank loans under completed and ongoing operations which would be converted into equity under the proposed project; (e) adoption of the agreed Plans of Action by the SCBs' respective Boards of Directors; and (f) retention by BI of the services of at least one credit expert. 19. The condition of disbursement for each SCB's second and third phase allocations of loan proceeds under the project would be that the SCB has to have satisfactorily complied with its agreed Plan of Action during the previous first and second phases, respectively, of the recapitalization exercise. Amounts disbursed under the recapitalization component during c_ch phase would be converted into equity at the end of each phase, subject to each SCB's compliance with its agreed Plan of Action and with the prior approval of the Bank. 20. Benefits. The policy agenda underlying the project is expected to lead to substantial efficiency gains in resource use In Indonesia. The delinking of the relationship that now exists between the SCBs and a relatively small number of industrial group borrowers should curb economic concentration. By changing past practices in credit allocation that have handicapped competitive forces not only in the financial sector, but also in the real sector, the project would promote more vigorous development in the real sector. The project supports the various initiatives undertaken by the OI to strengthen basic institutional infrastructure--banking legislation, reliable credit information system, prudential regulations and effective supervision--for a stable and efficient banking sector. These initiatives complement the GOI's other recent actions undertaken with bilateral and multilateral assistance in furthering development of the money and capital markets, and improving commercial law in order to facilitate and support an increased level of private business transactions. 21. iAsks. There are risks in that the SCBs may be slower than expected in developing into efficient financial institutions due mostly to opposition from vested interests (since changes in the ways SCBs do business in the future will affect existing business relations, requiring adjustments in the real sector) and/or an unexpected deterioration in ove: .11 macroeconomic conditions leading to difficulties for the SCBs in upgrading the quality of their earning assets. These risks are considered moderate, however, because of the GOI's demonstrated determination to promulgate legislation that will - 8 - require, within the framework of the project, changes in the SCBs' past practices as well as the GOI's track record of sound macroeconomic management. 22. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Lewis T. Preston President Attachments Washington, D.C. October 19, 1992 - 9 §Schedule A INDONESIA FINANCIAL SECTOR DEVELOPMENT PROJECT Estimated Proiect Cost and Financing Plan (US$ million) Local Foreign Total Estimated Costs la Recapitalization of the SCBs 2,665.51b 903.0 3,568.5/b Capacity Building Technical Assistance /c_ 0.5 7.0/c 7.5lc Total Proiect Cost 2.666.0/b 910.0 3.576.0/b Financinz Plan Direct Capital 755.5 307.0 1.062.5 IBRD - 307.Oc- 307.0Lc, GOI 755.5 - 755.5 Other Capital 1,910.5 603.0 2.513.5 Conversion of subordinated debt 879.5 603.0 1,482.5 (Of which: IBRD) (394.6) (276.0) (670.E) Retained earnings (SCBs) 449.5 - 449.5 Reserves for loan losses 117.5 - 117.5 Subordinated debt 464.0 - 464.0 Total Financina 2.666.0/b 910.0 3.576.O0b /a Exclusive of duties and taxes, which are insignificant. /b Exclusive of $300 million equivalent in local currency expenditures representing 50 percent of the total estimated cost of individual subproject investments in the private sector that would be financed with subproject sponsors' equity ($180 million equivalent) and other financial resources of the SCBE ($120 million). le Includes refinancing of the PPF No. P-162 in the amount of $1.0 million. - 10 - Schedule B INDONESIA FINANCIAL SECTOR DEVELOPMENT PROJECT Procurement Method and Disbursements ($ million) Procurement Method /a Total Proiect Element ICB LCB Other NA cost Recapitalization of the SCBs - - 903.0 2,665.51b 3,568.5 (300.0) (300.0) Technical Assistance Consultants IC - - 7.0 - 7.0 (6.7) (6.7) Training - - 0.5 - 0.5 (0.3) (0.3) Total - - 910.5 2.665.5 3.576.0 (30-7.0) (307.0) Disbursements Cateaory Amount Percent Investment Credit 300.0 For civil works, 50Z of expenditures For goods, 100% of foreign expenditures, 100X of local expenditures (ex-factory cost), and 60% of other locally procured items. Technical Assistance 7.0/d Consultants 6.7/d 100X Overseas Training 0.3 100% Total 307.0 Estimated Bank Disbursements 1IRD FY 1993 1994 1995 1996 -------------- ($ million) ------------- Annual 101.7 103.0 102.0 0.3 Cumulative 101.7 204.7 306.7 307.0 la Figures in parentheses represent the amounts to be financed by the proposed Bank loan. Ib Includes conversion of subordinated debt into equity, new equity infusions, SCB internally generated earnings, and supplementary capital comprising subordinated debt and eligible loan loss reserves. c Employment of consultants in accordance with Bank guidelines. Id Including refinancing of the PPF No. P-162 in the amount of $1.0 million. - 11 - Schedule C INDONESIA FINANCIAL SECTOR DEVELOPMENT PROJECT Timetable for Key Proiect Processinr Events Time taken to prepare: 20 months Prepared bys BI and MO1, with Bank assistance First Bank mission: May 27, 1990 Appraisal mission departure: May 1, 1991 Post-appraisal mission departure: February 24, 1992 Negotiations: June 5-10, 1992 Planned date of effectiveness: December 1992 List of relevant PCRs and PPARs: PPARs: Credit 436-IND (Report No. 2015); Credit 310-IND (Report No. 2563); Loan 1363-IND (Report No. 3862); Loans 1054-IND, 1437-IND and 1703-IND (Report No. 6403) PCRs: Credit 785-IND and Loan 2011-IND; Loan 2430-IND; and Loan 2277-IND - 12 - Schedule D Page 1 of 5 STATUS OF BANK GROUP OPERATIONS IN INDONESIA A. STATEMENT OF BANK IOANSAND IDA CREDITS 4A (as of June 30, 1992) Amount (USS million) Loan/ Bank IDA Credit Fiscal Original Principal Undis- number Year PurMose (less cancellation) bursed Ninety-seven Loans and forty-eight credits 8,238.18 901.60 fully disbursed Of which SECALS, SALs and Program Loans b 2780 1987 Trade Policy Adjustment 300.00 2937 1988 Second Trade Policy Adjustment 300.00 3080 1989 Private Sector Development 350.00 3267 1991 Second Private Sector Development 250.00 Subtotal: 1.200.0Q0 2232 1983 Nucleus Estate and Smallholders VII 96.00 16.11 2341 1984 Third Agricultural Training 63.30 0.15 2344 1984 Nucleus Estate and Smallholder Sugar 70.30 0.96 2431 1984 Second Swamp Reclamation 65.00 8.25 2474 1985 Upland Agriculture and Conservation 11.30 3.75 2-494 1985 Smallholder Rubber Development II 74.00 15.00 2529 1985 Fourth Population 35.13 1.62 2542 1985 Second Health (Manpower Development) 38.30 7.38 2543 1985 Kedung Ombo Multipurpose Dam 156.00 7.77 and Irrigation 2547 1985 Second University Development 147.00 20.87 2560 1985 West Tarum Canal Development 41.40 0.61 2577 1985 National Ports Development 82.69 14.95 2578 1985 Transmigration V 97.00 4.71 2628 1986 Smallholder Cattle Development 32.00 4.48 2632 1986 Second East Java Water Supply 43.30 2.81 2636 1986 Second Nutrition & Community Health 33.17 1.27 2638 1986 Nusa Tenggara Agariculture Support 33.00 13.24 2649 1986 Central and West Java Irrigation 166.00 13.69 2690 1986 Gas Distribution 34.00 12.19 2702 1986 Export Development 64.50 1;24 2705 1986 Manpower Development and Training 58.10 7.41 L The status of the projects listed in Part A is described in a separate report on all Bank/IDA-financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. Approved during or after FY80. - 13 - Schedule D Page 2 of 5 Amount (USS million) Loan/ Bank IDA Credit Fiscal Original Principal Undis- number Year Purpose (less cancellation} bursed 2725 1986 Housing Sector Loan 200.00 3.02 2748 1987 Third National Agricultural Extension 55.00 10.47 2773 1987 Fisheries Support Services 24.50 14.27 2778 1987 Power Transmission & Distribution 226.00 20.99 2800 1987 BRI/KUPEDES Small Credit 101.50 0.88 2817 1987 Regional Cities Urban Transport 51.00 1.12 2879 1988 Industrial Energy Conservation 21.00 6.99 2881 1988 Second Rural Roads Development 190.00 33.58 2891 1988 Railway Technical Assistance 28.00 8.35 2930 1988 Forestry Institutions & Conservation 30.00 14.01 2932 1988 Jabotabek Urban Development 150.00 73.08 2940 1988 Accountancy Development 113.00 62.82 2944 1988 Higher Education Deveiopment 140.30 14.25 2979 1988 Second Export Development 165.00 20.35 2992 1989 Tree Crop Human Resource Development 18.40 9.45 3000 1989 Tree Crop Processing 118.20 87.71 3031 1989 Agriculture Research Management 35.30 21.46 3040 1989 Industrial Restructuring 284.00 80.82 3041 1989 Small & Medium Industrial Enterprise 100.00 16.71 3042 1989 Third Health 43.50 27.95 3097 1989 Power Sector Efficiency 337.00 265.41 3098 1989 Paiton Thermal Power 354.00 261.77 3112 1990 Public Works Institutional 36.10 18.13 Development & Training 3133 1990 Highway Sector 350.00 157.59 3134 1990 Professional Human Resource Development 117.50 75.83 3158 1990 Second Secondary Education 154.20 123.02 3180 1990 Rural Electrification 329.00 268.38 3182 1990 Third Telecommunications 350.00 285.76 3209 1990 Gas Utilization 86.00 78.43 3219 1990 Second Jabotabek Urban Development 190.00 172.96 3243 1990 Second Forestry Institution 20.00 19.00 and Conservation 3246 1991 Third Jabotabek Urban Development 61.00 55.53 3249 1991 Second BRI/KUPEDES Small Credit 125.00 83.02 3282 1991 Fertilizer Restructuring 221.70 130.49 3298 1991 Fith Population 104.00 92.37 3302 1991 Provincial Irrigated Agriculture 125.00 115.20 Development 3304 1991 East Java/Bali Urban Development 180.30 169.46 3305 1991 Yogyakarta Upland Area Development 15.50 13.83 3311 1991 Second Higher Education 150.00 128.28 3340 1991 Sulawesi-Irian Jaya Urban 100.00 95.49 Development - 14 - Schedule D Page 3 of 5 Amount (USS million) Loan/ Bank IDA Credit Fiscal Original Principal Undis- number Year Purpose (less cancellation) bursed 3349 1991 Power Trans,nission 275.00 272.63 3385 1991 Technical Assistance Project for 30.00 27.00 Public and Private Provision of Infrastructure 3392 1992 Second Irrigation Subsector 225.00 193.68 3402 1992 Agricultural Financing 106.10 105.66 3431 1992 Third Non-Formal Education 69.50 67.00 3448 1992 Primary Education Quality Improvement 37.00 37.00 3454 1992 BAPEDAL Development 12.00 12.00 3464 1992 Treecrops Smallholder 87.60 87.60 3482 1992 Fourth Telecommunications 375.00 375.00 Total 16.397.87 901.60 of which has been repaid 12,844.60 79.82 Total now held by Bank and IDA 13553.27 821.78 Amount sold 88.08 of which repaid 68.66 Total undisbursed 4.474.26 Following projects have already been approved by the Executive Directors but not yet been signed as.of June 30, 1992: 3490 1992 Kabupaten Roads III 215.00 3496 1992 Primary School Teacher Development 36.60 3501 1992 Suralaya Thermal Power 423.60 Schedule D Page 4 of 5 B. STATEMENT OF IFC INVESTMENTS (as of June 30. 1992) (USS million) Undisbursed Original Total including Fiscal Commitments Held Participants' Year Company Tyoe of business Loan Ecuity Total by IFC Portion 1971/74 P.T. Primatexco Textiles & fibers 4.0 0.8 4.8 - 1971 P.T. Unitex Textiles & fibers 2.5 0.8 3.3 0.3 1971/73/ P.T. Semen Cibinong Cement 46.0 5.8 51.8 - 74/76/84 1971 P.T. Kabel Indonesia Cables 2.8 0.4 3.2 - 1972/77/ P.T. Daralon Textiles Textiles & fibers 5.8 1.5 7.3 - 79 Mfg. Corp. 1973/89 P.T. Jakarta Tourism 9.8 2.7 12.5 2.7 Int'l Hotel 1974 P.T. Private Dev. Development - 0.5 0.5 0.4 Finance Co. of finance Indonesia 1974 P.T. Monsanto Electronics 0.9 - 0.9 - 1974/77 P.T. Kamaltex Textiles 3.8 0.8 4.5 - 1980 P.T. Papan Sejahtera Housing finance 4.0 1.2 5.2 1.2 1980 P.T. Supreme Indo- Dinnerware 11.1 0.9 12.0 - American 1980/87 P.T. Semen Andalas Cement 48.6 5.0 53.6 20.9 - 1982/85 P.T. Saseka Gelora Leasing 5.0 0.4 5.4 0.4 - Leasing 1988 P.T. Bali Holiday Tourism 11.3 - 11.3 2.2 - 1988 P.T. Asuransi Jiwa Insurance - 0.3 0.3 0.3 - 1989 P.T. Monterado Mining 8.0 2.0 10.0 0.0 1990/91 P.T. Astra /-& Manufacturing 12.5 22.4 34.9 12.5 - 1990 Federal Motor /a Manufacturing 12.5 - 12.5 - - 1990 Nomura Fund Ctry. Fund - 3.0 3.0 1.5 - 1990 Bank Umum Nacional Dev. finance 10.0 - 10.0 10.0 10.0 1990 Bank Niaga Dev. finance 7.5 - 7.5 5.0 5.0 1990 Raja/Pendopa Oil exploration - 3.6 3.6 3.6 1.7 1990 P.T. Agro Muko Plantations 10.5 2.2 12.7 12.7 6.8 1990/91 Indo Rama Synthetics Textiles 27.0 6.2 33.2 33.2 - 1991 Argo Pantes Textiles 83.0 13.0 96.0 43.0 - 1991 P.T. Asahi Chemicals Chemicals 4.0 1.8 5.8 5.8 0.4 1991 P.T. Rimba Partikel Wood products 19.8 0.6 20.4 10.6 20.6 1992 P.T. Nusantara Capital market 2.5 - 2.5 2.5 - 1992 P.T. Citra Agramas Capial market 2.0 - 2.0 1.9 - 1992 P.T. Bakrie Kasei Chemicals 125.0 9.6 134.6 39.6 75.1 1992 P.T. Lantai Keramik Ceramic Tiles 15.4 1.7 17.1 7.1 17.1 Mas 1992 P.T. Swadharma Tourism 35.0 - 35.0 - 35.0 Total 530.2 IL_. 617.3 217.2- 171.7 La Loan subsequently cancelled. - 16 - Schedule D Page 5 of 5 (USS million) Undisbursed Original Total including Fiscal Commitments Held Participants' Year Company TIDe of business Loan ESuity Total by IFC Portion Projects approved but not yet signed 1989 P.T. Kaltenglk Mining - 1.4 1.4 - - 1990 P.T. Kayu NICfbL Wood products 12.2 0.9 13.1 - - 1991 P.T. Petrochemical Petrochemicals 325.0 15.0 340.0 90.0 340.0 1991 P.T. Saseka Gelora Leasing 20.0 - 20.0 5.0 20.0 1991 VIC Indonesia Capital markets - 1.5 1.5 1.5 1.5 1992 P.T. BBD Heller Capital markets - 0.6 0.6 0.6 - 1992 P.T. Mitra Corp Manufacturing - 16.0 16.0 16.0 16.0 1992 P.T. South Pacific Textiles 50.0 - 50.0 20.0 50.0 Viscose 1992 P.T. Astra Microtronics Electronics 29.0 1.6 30.6 12.6 - 1992 P.T. Swadarma Tourism 51.0 - 51.0 - 51.0 A Loan approved but subsequently dropped. Ahitel S"tf ,hon Sea M TH\< 0 tao. 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