Capital market blueprint launched
Capital market blueprint launched
JAKARTA (JP): The Indonesian capital market aims to become the
largest in Southeast Asia by 2020, 24 five years from now.
At least that is the optimistic scenario outlined in the
country's capital market blueprint launched by the Capital
Market Supervisory Agency (Bapepam) on Thursday.
The short-term targets stipulated in the 27-page blueprint
includes the splitting of the stock depository and settlement
agency into two separate institutions -- a central depository
agency and a clearing and settlement agency. The central
depository agency, which will hold all securities
traded on local exchanges, will be set up before August this
year, while the establishment of the clearing and settlement
agency must be completed before 1997.
The blueprint does not, however, elaborate on the future of PT
Kliring Deposit Efek Indonesia which at present, besides handling
clearing and share settlement, also acts as a custodian agency
for investors.
A number of banks currently operating as custodians for both
their domestic and foreign clients are being encouraged to take
part in the establishment of the planned central depository agency.
Bapepam chairman I Putu Gede Ary Suta said that procedures for
the central depository agency are being hammered out. This
includes the use of nominees as well as the ownership of shares.
Yet the blueprint does not examine the future of the stagnant
Surabaya Stock Exchange (SSX), which in practice acts more like a
branch of the Jakarta Stock Exchange (JSX) at the moment, rather
than an independent stock exchange.
Other short-term objectives also include the introduction of a
set of regulations to encourage the establishment of mutual funds
and to boost their trading on the stock exchanges.
The planned regulations are expected to deal with the
marketing of the products of mutual funds to investors on the
primary market.
The improvement of public confidence in the country's capital
market is also one of the objectives given in the blueprint.
There are many potential local investors but they are
reluctant to enter the capital market for fear of being cheated
by brokerage companies.
The negative image of the stock market is understandable,
given the small size of the brokerage companies on the Jakarta
and Surabaya stock exchanges.
Some brokerage companies do not only lack capital but are also
poorly managed to boot.
To protect the investing public, the blueprint outlines a
number of procedures for stricter supervision of brokerage
companies and other capital market supporting agencies.
The introduction of the blueprint comes hot on the heels of
the enactment of the Capital Market Law in January this year.
The newly introduced capital market law provides a stronger
legal framework, not only to ensure fair trading but also to
attract new domestic investors. (hen)