Lack of enforcement overshadows changes in capital market law<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
Tougher sanctions may be imposed on violators of the capital
\nmarket law under a proposed amendment, but experts are skeptical
\nthey would be effective in ensuring good corporate governance due
\nto the government's poor record in law enforcement.<\/p>\n
The government proposed on Monday the amendment to the House
\nof Representatives as part of a plan to transfer the supervisory
\nrole of the Capital Market Supervisory Agency (Bapepam) to the
\nplanned Financial Services Authority Institution (FSAI). The
\ninstitution is also to take over the banking supervisory role of
\nBank Indonesia.<\/p>\n
Under the planned changes in the 1995 Capital Market Law, the
\ncapital market authority would be allowed to ask the Directorate
\nGeneral of Immigration to impose a travel ban on those suspected
\nof committing a crime in the industry.<\/p>\n
The amendment also includes two new articles, which stipulate
\nthat those who disclose confidential information on customers of
\nsecurities firms or investment management companies could risk a
\nmaximum sentence of ten years and a fine of up to Rp 10 billion
\n(US$1.2 billion).<\/p>\n
Capital market officials who are involved in the violation of
\nthe law could face a jail term of up to five years and penalty of
\nRp 10 billion.<\/p>\n
However, capital market analyst Ryan Kiryanto from Bank BNI
\ntold The Jakarta Post that the new set of proposed sanctions were
\nstill too lenient, particularly as Bapepam had tended in the past
\nto only impose minimum sanctions.<\/p>\n
A minimum penalty would not deter people nor companies from
\nbreaking the law.<\/p>\n
\"Numerous violations have occurred in our stock market because
\nof the lack of law enforcement by Bapepam. The proposed penalties
\nwill not deter people from violating (the law),\" said Ryan.<\/p>\n
The interest of public investors in the local stock market
\nhave often been harmed by manipulation and other forms of
\nfinancial crimes, but the criminals have often gone free due to
\nthe lack of enforcement.<\/p>\n
Ryan also doubted if the FSAI could be tougher than Bapepam,
\nas the institution might find difficulties in exercising its
\nsupervisory role in the domestic financial services industry, due
\nto the lack of staff and the complicated nature of the work.<\/p>\n
He added that strong objections from the central bank and
\nother industry players against establishing the FSAI in the near
\nfuture would also pose a problem.<\/p>\n
The finance ministry plans to start the FSAI in 2006, while
\nthe central bank has called for a five-year delay.<\/p>\n
Ryan said that even in developed nations, the establishment of
\nsuch a key institution require a longer period of preparation.<\/p>\n
Meanwhile, chairman of the Association of Publicly Listed
\nCompanies (AEI) Gunadharma concurred with Ryan, saying that it
\nwould be a \"disaster\" if the FSAI became the watchdog of the
\ncapital market industry, as the local stock market was still
\nstruggling to recover from the impact of the late-1990s financial
\ncrisis.<\/p>\n
Other key points of proposed changes to capital market law<\/p>\n
1. Bapepam can set up a cooperation with capital market
\nsupervisory board of other countries to adopt new capital market
\nrules and mechanism.<\/p>\n
2. Companies, institutions, or associations which are related to
\nthe capital market industry can risk penalty of up to Rp 15
\nbillion if found guilty of violating the law.<\/p>\n
3. Any party which intentionally destroys, eliminate, changes,
\nconceals, or forges records of a listed company with the aim to
\nbenefit other party or to deceive Bapepam will be sanctioned
\nwith a maximum imprisonment of five years and a fine of Rp 10
\nbillion.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/lack-of-enforcement-overshadows-changes-in-capital-market-law-1447893297",
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"sponsor": "Okusi Associates",
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