Protecting the investing public<\/p>\n
In the next several months, the House of Representatives (DPR)
\nwill review a new bill on Indonesia's capital market. It should
\nbe greatly welcomed.<\/p>\n
In view of the rapid developments in the business sector,
\nnotably financial transactions, it would indeed be too risky to
\nlet the capital market, whose capitalization of US$48 billion
\nalready represents about one third of the country's gross
\ndomestic product, be governed by a law enacted in 1952.<\/p>\n
Moreover, the draft legislation focuses attention on the right
\narea by vesting more power with the Capital Market Supervisory
\nAgency (Bapepam). Instead of trying to tighten market control by
\nproviding the statutory body with licensing authority, the bill
\nzeroes in on improving the rules of the games -- and by
\nempowering Bapepam to properly enforce the rules. Bapepam will
\nthen be better suited to ensure the development of a fair,
\nefficient, transparent and liquid capital market.<\/p>\n
Of course, many of the rules stipulated in the bill are
\ncurrently in effect, but they are based on numerous government
\nregulations and ministerial decrees issued separately over the
\nlast two decades.<\/p>\n
The draft legislation takes the right approach in that the
\ngovernment (Bapepam) will not approve of or license a share
\nlisting, a measure that could be construed as a recommendation
\nfor a share issue. Bapepam instead focuses its attention on
\nenforcing full disclosures and monitoring disclosures, after
\nlisting, by share issuers. Such rigor will provide the investing
\npublic with adequate, fair and accurate information, which is
\nessential for assessing the normal business risks of a particular
\ncorporate stock.<\/p>\n
Bapepam also sees to it that the boards of directors and
\ncommissioners of listed companies fulfill their prescribed
\nresponsibilities. Financial intermediaries and other supporting
\ninstitutions in the capital market, such as public accountants,
\nlegal consultants, appraisal companies, underwriters and brokers,
\nwill also be held to the same standard.<\/p>\n
These boards and institutions will be responsible for the
\ntruth and accuracy of all the information provided in the
\nstatement for the registration of a share listing. Should they
\nfail to carry out their responsibilities properly, they will be
\nsubject to heavy penalties.<\/p>\n
The bill also empowers Bapepam to conduct investigations into
\nsuspected market manipulation, such as artificially hiking share
\nprices, and other forms of securities fraud. They may also take
\nlegal actions against those suspected of involvement in similar
\nforms of manipulation.<\/p>\n
All these rules are indeed necessary to protect the interests
\nof the investing public, especially because most of the companies
\nlisted on the domestic stock exchanges have sold less than 50
\npercent of their total shares. As a result, those publicly listed
\ncompanies, and consequently their management and boards of
\ncommissioners (supervisors), remain controlled by the founders,
\nwho are also the majority shareholders.<\/p>\n
So all in all, the provisions of the bill on the capital
\nmarket are designed mainly to ensure a fair, transparent and
\nefficient market to enable investors to adequately analyze the
\nnormal business risks of their portfolio management. There is not
\na single provision in the bill that can be construed as a
\nrecommendation, let alone a guarantee, that investments in the
\ncapital market will produce profits.<\/p>\n
Investing in the stock exchange presents greater risks than
\nplacing money in savings accounts or time deposits. That is
\nnormal. The potential returns or rewards from investments in
\ncorporate stocks are also bigger than those in bank deposits.
\nShare owners may get dividends and capital gains, whereas
\ndepositors benefit only from interest incomes.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/protecting-the-investing-public-1447893297",
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"sponsor": "Okusi Associates",
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