Recognizing the necessity of modernizing the financial markets, USAID worked closely with Indonesia’s Capital Market Regulatory Agency (BAPEPAM – the predecessor of today’s Financial Services Authority), to address these challenges. USAID assisted BAPEPAM to draft new regulations, improve corporate disclosure standards, and enhance investor protections.
USAID’s support included providing technical assistance to improve the operations of the Jakarta Stock Exchange, privatize its management, and introduce automated trading and settlement systems. USAID also instituted training programs tailored to both market participants and regulators, including facilitating learning opportunities in New York for officials from the Ministry of Finance. These initiatives built up the local expertise needed to manage a modern financial ecosystem.
“At that time, the government was inexperienced in capital markets. They were unsure about the next steps,” says Lanna Lubis, who managed USAID’s financial market assistance program. “USAID assisted them to get the knowledge and experience they needed to build a successful market.”
Those efforts yielded remarkable results. By 1995, market capitalization had soared to $49 billion (about $131 billion in 2024 value), with 223 companies listed on the Jakarta Stock Exchange. The volume of daily trading activity was more than 1,000 times greater than in 1988, reflecting a much more active and confident market. Meanwhile, privatization of the Jakarta Stock Exchange and the introduction of a modern regulatory framework attracted foreign capital, infusing outside investment into Indonesia’s growing economy.
Today, the Indonesia Stock Exchange (IDX) – the successor to the Jakarta Stock Exchange – lists more than 900 companies worth about $800 billion. The IDX has been recognized for the past two years as the “Best Stock Exchange in Southeast Asia” by investment journal Alpha Southeast Asia. This success is the result of reforms enacted 30 years ago with USAID’s assistance – marking another highlight of the long partnership between USAID and Indonesia.