Market progress key to privatization<\/p>\n
JAKARTA (JP): The performance of the domestic stock exchanges
\nin attracting domestic investors will be a key factor in
\ninfluencing the government's decision on the location of the
\ninitial public offerings (IPO) of state-owned companies.<\/p>\n
Director General for State Companies at the Ministry of
\nFinance Bacelius Ruru said here yesterday that the government
\nwould go ahead with its plan to privatize state companies.<\/p>\n
\"But whether the privatization will be conducted through the
\ndomestic or foreign stock exchanges will depend on the
\nperformance of the domestic markets,\" Ruru told a meeting
\norganized by the Indonesian Securities Companies Association.<\/p>\n
Ruru therefore called on domestic securities companies to
\nincrease their capacity, expand their domestic-investor base and
\nbecome more active in the market.<\/p>\n
The government has so far preferred the international stock
\nexchanges for the IPOs of big state companies,apparently because
\nof the limited capacity of the domestic stock exchanges.<\/p>\n
Last year Indosat offered 35 percent of its outstanding shares
\nbut only 10 percent of these shares were allocated for the
\ndomestic markets. Another company, PT Tambang Timah, also sold
\ntwo thirds of its offering abroad.<\/p>\n
Chairman of the Capital Market Supervisory Agency (Bapepam) I
\nPutu Gede Ary Suta agreed that the domestic securities companies
\nshould improve their professionalism and strengthen their capital
\nto play a bigger role in the market.<\/p>\n
\"The market is created by brokers, not by issuers,\" Putu
\nasserted.<\/p>\n
Activities<\/p>\n
He cited that out of the 197 securities companies licensed to
\ntrade on the Jakarta Stock Exchange, almost 38 do not make
\ntrading activities at all, or only do one transaction a day. And
\nabout 95 percent of trading activities on the exchange are
\ndominated by the twenty largest brokerage firms.<\/p>\n
\"So you have to start from a position of strength. How can you
\nunderwrite a share issue of up to Rp 1 trillion (US$436.1
\nmillion) if you are backed up by only Rp 100 billion in capital?\"
\nPutu argued.<\/p>\n
\"We, at Bapepam, have decided not to license any new
\nsecurities companies until next year. This is not to block
\nnewcomers, we just want to be selective and make sure no license
\nis issued to the wrong person, who could threaten the market.\"<\/p>\n
Putu advised securities firms to learn from the banking
\nindustry, and not only be proactive in finding new customers but
\nalso in striving for the best possible standard of service.<\/p>\n
The reality is that most securities firms do not have client
\naccounts, and that they often take part in underwriting for their
\nown profit, not for their clients, the investors.<\/p>\n
Putu shared Ruru's view that the government will enlarge the
\ndomestic portion of IPOs by state companies when the local
\nexchanges have the capacity to absorb big issues.<\/p>\n
\"For that reason, domestic securities firms should be
\nsupported by strong capital and have a large investor base,\" he
\nadded. (08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/market-progress-key-to-privatization-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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