Wed, 15 Mar 2000

Experts say laws needed for e-commerce

JAKARTA (JP): Experts and Internet businessmen demanded on Tuesday that local stock markets allow the listing of prospective internet start-up companies to raise cheap funds to finance their investment.

They also demanded the government provide a legal infrastructure for the development of electronic commerce to anticipate the growing demand for it.

Felia Salim, former director of the Jakarta Stock Exchange (JSX), said existing stock market regulations allowed only long- established companies with adequate financial track records to raise funds on the market.

The regulations made it impossible for local Internet-based companies to go public because they were mostly start-up companies and had not generated profits, he added.

"The government and the exchanges should consider changing the existing regulations on the stock market, by creating a second market for example, to give more opportunities for startup businesses such as Internet-based companies to raise funds through the market," she said at a seminar on e-commerce and government policy conducted by the Asia Foundation.

The head of the Capital Market Supervisory Agency's stock market supervision unit, Nur Sigit, said the agency was open for any suggestions from market players, and was ready to modify regulations to accommodate the demand for Internet companies to raise funds through stock markets.

He noted that the Surabaya Stock Exchange (SSX), which had less rigid listing requirements than the JSK, could possibly accommodate the interests of Internet startup companies by modifying its listing regulations.

Meanwhile, JSX corporate secretary Saka Abadi said the exchange would possibly allow startup Internet companies to offer stocks to the public through the exchange.

He noted that the exchange was currently studying the possibility of introducing three different trading boards for different types of companies.

The first or the main board would be reserved for established companies, the second board for prospective startup companies like Internet or mining companies, and the third for companies offering stocks with a nominal value of below Rp 500 a piece.

Saka also said that the exchange would continue to proceed with its scriptless trading program. When trading became scriptless, Saka said, retail investors could also conduct stock trading from home via the Internet.

Meanwhile, Sachin Gopalan, the cofounder of, and Jerry Justianto, the cofounder and chief technology officer of, demanded the government provide a legal infrastructure for on-line transactions or e-commerce.

Gopalan said the failure of the government to provide legal assurances on the security of making transactions on the Internet would discourage customers from purchasing goods from it.

Jerry said the absence of a strong legal infrastructure for e- commerce would also deter foreign investors from investing in e- commerce providers here, because they would know that the businesses would not generate much profit as not many customers would be willing to make purchases on the Internet.

Indonesia Net Exchange director Eddie Darajat said such a legal infrastructure for e-commerce was necessary to provide a conducive climate for e-commerce business.

But he warned that the government should never control the e- commerce industry as it would be counterproductive for the industry.

"We don't need the government to regulate the industry. But we need the government to immediately provide a conducive environment for healthy e-commerce development by encouraging e- entrepreneurship and eliminating the barriers in infrastructures," he told

Ichjar Musa, special assistant to the coordinating minister for economics, finance and industry, acknowledged that it was not easy for the government to react fast and produce effective measures to help develop e-commerce.

"The way the government is currently handling Internet-related issues is so fragmented. You can't expect the government to act efficiently on this issue since there is hardly any solid coordination between related government institutions," he said.

Meanwhile, Minister of Industry and Trade Jusuf Kalla said the government would provide better support for the development of e- commerce in the country.

One of the significant steps to be taken soon by the government would be to launch a National Certification Authority (NCA), he said.

The NCA, currently being developed by the government in cooperation with Indosatcom, an e-commerce division with state- owned international call provider PT Indosat, aims to assess the financial and legal capabilities of an individual or company to participate in on-line trading.

"That way, both the customers and sellers can be sure that the party they are dealing with do exist and are capable financially and legally of making a transaction with them," he said. (cst)