School of Law


May 28, 2002








This is the final report for the period January 6, 2000 - January 31, 2002 under the terms of PEG Grant Award No. PEG-1999-06 to the University of South Carolina for the Law & Finance Institutional Partnership (LFIP), under Program Director Prof. David Linnan. Reference is made to our interim annual, quarterly and weekly reports for a full listing of activities. This final report is intended only to be a summary review of general activities and progress by category.




LFIP was a joint undertaking of the Graduate Law Program of the University of Indonesia (UI), the Jakarta Stock Exchange (BEJ) and the University of South Carolina (USC). It worked in two distinct areas, on capital markets and general economic law reform matters, involving cooperation among lawyers, economists, university & government personnel and capital market professionals. LFIP's general objectives included:



Policy Impacts and Highlights


To properly understand LFIP's activities, please keep in mind that it worked in the private sector doing capital markets work, in the public sector doing economic law reform work and otherwise experimented with related activities particularly through universities in the areas of distance education employing videoconferencing and the Internet. LFIP tried to listen carefully in Indonesian terms to what was happening on a near term time horizon in the sectors in which it worked, then sought to be proactive in pursuing goals particularly by means that resonated with its Indonesian partners.


On the capital market side LFIP's most significant impacts include:



On the law reform side LFIP's most significant impacts include:



In terms of distance education and related work LFIP's most significant impacts include:




Achievements Compared to Plan


LFIP January 6, 2000-January 31,2002 Outputs


  Policy Workshops, Conferences, Regional Fora Press Articles on Relevant Economic Issues Policy Dialogues with GOI or Parliament Collaboration Activities with Other Donors

Policy Studies, Analytical Memoranda, Reports, Draft



Non-USAID Funding Leveraged


2000 & 2001

$ 43,077
Work Plans 2000 & 2001
$ 41,500



Concerning LFIP's 2000-2001 outputs, in all categories LFIP's actual outputs exceeded planned outputs, in many categories substantially. For example, under the category for policy workshops/conferences planned 2000-2001 outputs were 30 while actual outputs in this category were 132 (440% of planned outputs). This very substantial overachievement resulted from three factors. First, for strategic reasons, as work progressed a decision was made increasingly to pursue substantial socialization or public workshop approaches as an appropriate public diplomacy tactic in substantive areas such as corporate governance or to develop public input for economic law bills pending before the DPR or parliament (because the DPR was gridlocked for political reasons for much of 2000-2001). Second, LFIP eventually videoconferenced three full-scale joint law classes between the US and Indonesia in 2000 as an experiment and in 2001 for programmatic reasons and to adjust to Indonesia's unsettled political situation in the second half of2001 and so added to events (however, even without the videoconferenced instruction actual would have exceeded planned outputs by more than 200%). Third, LFIP's videoconferencing arguably was a programmatic multiplier for actual events by making smaller policy seminars and classes so easy and relatively cheap to organize ("importing" experts to Indonesia for 2-3 hours at a time via videoconferencing and so avoiding the costly one-week minimum round trip otherwise necessary for physical travel from North America to be present physically for a 2-3 hour presentation) that outputs were substantially increased by the medium itself. As its experience increased with the videoconferencing medium, LFIP changed its own plans to better take advantage of substantial cost and time savings over traditional approaches to program operation.


Concerning the category for press articles planned 2000-2001outputs were 55 while actual outputs were 116 (211% of planned outputs). This substantial overachievement resulted from two factors. First, since media coverage is normally tied to events, our substantial overachievement in the policy workshops/conference category itself boosted press articles. Second, as time went on we refined our approach to media by working through an UI staffer who was himself an ex-journalist to recruit print and broadcast journalist participation in Jakarta by the national media, while urging local event co-sponsors in the provinces to recruit their local media for events like our DPR input roadshows (while local journalists were drawn by the relatively senior Indonesian government figures and experts in LFIP's roadshows). The knack is not just organizing a seminar in the provinces, but rather organizing an event considered newsworthy locally in Indonesian terms because it is perceived as mixing local and Jakarta elites.


Concerning the category for donor collaboration, planned 2000-2001 outputs were 14 while actual outputs were 34 (243% of planned outputs). This substantial overachievement resulted from three factors. First, the Asian Development Bank was designated lead donor for corporate governance matters and so organized periodic donor coordination meetings in Jakarta, to which Prof. David Linnan was regularly invited as the USAID-funded substantive expert most active in good corporate governance work through general capital markets and law reform activities. Second, the Program Director would regularly be invited for coordination reasons to discuss overlapping general financial sector law reform issues with multilateral project consultants, whenever they were focused on financial sector operational issues outside Indonesia's continuing banking problems (because LFIP incorporated the BEJ and worked regularly with the KNKGCG as leading capital markets institutions). This led to significant cooperation at the working level, for example when the ADB made available its financial sector reform consultants free of charge to participate in LFIP socialization work, or in on-going good corporate governance work at the KNKGCG level. Third, additional contact existed with the GTZ, for example, by virtue of LFIP's regular loan of the UI-Salemba videoconferencing facility for competition law work. As a function of its approach, LFIP was open to cooperation with third parties, including both Indonesian and donor-funded projects, wherever we saw an opportunity to build relationships and advance programmatic goals.


Otherwise, planned 2000-2001 outputs compared to actual outputs were not greatly out of line. Policy dialogue planned 2000-2001 outputs were 100, while actual outputs were 144 or 144% of planned outputs. Policy studies planned 2000-2001 outputs were 73, while actual outputs were 95 or 130% of planned outputs. Planned 2000-2001 outputs for additional funding leveraged were $41,500, while actual outputs were $43,077 or 104%.


Continuing Work on Objectives


Work continues in several areas, for example distance education, as a function of sustainability and continuing relationships particularly at the university to university level. For example, a joint videoconferenced graduate-level international trade law course linking classes at UI in Jakarta and USC in Columbia, USC was held January-ApriI 2002. Another is planned for August-November 2002 on the international financial system linking UI in Jakarta, UGM in Yogyakarta, USU in Medan, UNDIP in Semarang and USC in Columbia, SC. LFIP considers the concept of a university consortium or network continuing with distance education within Indonesia and across international borders as one of its legacies with the greatest potential for longer term human resource and institutional improvements in Indonesia.


In the capital markets area, Prof. Dr. Hikmahanto Juwana of UI continues work on creation of a securities arbitration system as academic expert for an alliance of capital markets SROs. Concerning making training materials available in the provinces to enable individuals to prepare for Indonesia's capital markets licensing examination, part of LFIP's planning in expanding distance education via videoconferencing to four Indonesian universities was anchored in the concept that distance education facilities should be used to disseminate capital markets training in the form of continuing education from Jakarta to Yogyakarta (UGM), Semarang (Indonesia's third largest city, where UNDIP is located) and Medan (Indonesia's fourth largest city, where USU is located). For cultural and other reasons, LFIP believes that videoconferenced live continuing education courses hold more promise for capital markets training through the medium term as compared with internet-based materials. Concerning introduction of exchange traded options on BEJ listed companies, the BEJ and Bapepam decided in the course of the grant in practical terms to subsume the introduction of equity derivatives as part of stock exchange demutualization discussions (including consolidation of the Bursa Efek Surabaya). Equity derivatives work is now part of demutualization work which is itself tied to reform of the Capital Markets Law of 1995 now tied into pending general legislation reforming financial supervision. Quantitative financial markets work through the BEJ continues in the preparation for publication of two finance-oriented works on trading development and disclosure scoring of BEJ-listed companies.


Indonesia remained a challenging work environment for the whole of the grant term, particularly in the second half of 2001 including the authorized evacuation of the US Embassy in which LFIP's Jakarta personnel elected not to participate. LFIP responded throughout by focusing on how to achieve its ultimate goals. In response to challenges, LFIP simply refocused and shifted its work to adjust to changing circumstances.




Respectfully submitted,
David K. Linnan
Program Director




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