Final approval on futures bill delayed again

Final approval on futures bill delayed again

JAKARTA (JP): Final approval of the bill on futures commodity
trading was canceled for the second time yesterday, as members of
the House of Representatives failed to agree with the government
on several important issues.

The government-sponsored bill, submitted to the House in
December, was scheduled to be approved on April 4 but was
postponed. It was delayed again yesterday.

The delay means the bill will not get the House's approval
until the next debate session which will be in early July to
September this year.

The current meeting sessions will end on April 15.

Sources said yesterday the government and some House members
were still divided over the type of commodities to be traded on
the futures exchange, the role of the national Commodity Exchange
Agency and the validity of the decree issued by Minister of
Industry and Trade for the establishment of a special team to
prepare the exchange's operations.

Legislators complained that the ministerial decree disregarded
the House's role because it was issued before the bill was
approved by legislators and before it was ratified by the
President.

The bill which will pave the way for the establishment of
Indonesia's first futures commodity exchange will provide a legal
foundation not only in trading activities but also to exchange
membership and trading supervision.

Under the proposed bill, the futures bourse would be run by
private companies while the government through a Commodity
Supervisory Board, would act only as supervisor.

Many analysts doubt the exchange can operate efficiently or
whether it is worth joining, considering that overseas exchanges
can be accessed.

Some fear the market will be dominated by big groups such as
the Federation of Edible Oil and Fats Association (FAMNI) and the
Association of Indonesian Coffee Exporters (AEKI) whose
commodities are likely to be the first to be traded on the
futures market.

The two associations have been actively preparing the
establishment of the futures commodity.

FAMNI Vice Chairman Tarmidzi Rangkuti said FAMNI had no
intention of monopolizing the exchange.

In fact seeking members who were willing to be listed as the
exchange's founders was not easy, he said.

"Many of FAMNI's members have not decided yet whether they
want to join (the futures exchange) or not. They say it's safer
to wait and see," he said.

"If FAMNI and AEKI are considered to have a close relationship
with the national Commodity Exchange Agency, it is because we
were the first to respond to the government's proposal to
establish a futures commodity exchange," Tarmidzi said.

Four Indonesian commodities have the potential to be traded on
the exchange: coffee, crude palm oil, rubber and cacao.

A feasibility study last year concluded that a futures trading
exchange would cost between US$5 million and $10 million to set
up and $1.5 million to run each year.

The exchange could reach break-even point in two to four years
of operation with fees for each transaction set between $2 and
$5. (pwn)